The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified

Samir Kaji of First Republic joins Nick on a special Crisis Coverage installment to discuss Relief $ for Startups via CARES Act, EIDL, PPP; & How an Extended Downturn Affects Emerging VC Funds. In this episode, we cover:

  • Startups...
    • The CARES Act became law on 3/27, but many are having trouble making sense of it and how it applies...
    • Let's start out w/ the two types of loans that are available to small businesses...
    • First off, can you explain the difference between the Economic Injury Disaster Loan Program (EIDL) and the Paycheck Protection Program (PPP)?
    • EIDL - No forgiveness potential and and requires personal guarantee?
    • PPP - Forgiveness potential and no personal guarantee?
    • Affiliation...  Dan Primack was writing about how the 500 employee rule and how much of Private Equity portfolio companies will be excluded b/c of how the language is written.  Can you explain the "affiliation issue?"
    • How can this be enforced/checked... so many obscure LLCs used for investment in companies... hard to verify.
    • April 3rd - Is this the date that PPP applications are available?
    • What advice do you have for startups right now, to be prepared and get to the front of the queue?
    • How will seed stage be impacted?
    • Some of the best companies (Uber, AirBnB) first took institutional capital after the 2008 crisis; is now the time to be aggressively investing?
  • VCs...
    • How are the existing funds w/ committed capital adjusting?
    • Will we see a lot of attrition / VC firms shutting down?
    • What are the impacts on firms that are actively raising?
    • Advice for those planning to raise a fund in the next year?
    • What do VCs and LPs need to hammer out before moving forward in this environment? (projections/protocol for capital calls, projections for investments, communication plans, etc.)
  • LPs...
    • What are you hearing from institutional LPs?
    • How about the family offices?
    • Is it still in a crisis/panic mode or have some allocators put together a solid investment plan going forward?
    • If you had to estimate, what % of capital commitments will default and/or be adjusted down?
    • Final thoughts and advice for startups and investors?

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