If there's no intellectual property, there's nothing for them to sell. In addition, it closely examines the amount and source of a company's venture capital funding, and lends only a portion of that. Lutes says that SVB is more likely to lend to companies that are funded by firms with which the bank has a prior relationship. As a bank, SVB has a unique risk advantage over other businesses, because the loans it makes are secured, and it is the first in line during bankruptcy proceedings. More Strategies for Survival Experts stress that before extending credit to a dotcom company, it is important to understand the structure of its funding.
Many startups receive their venture capital in stages after they hit certain performance milestones.
But there could be another milestone it's going to hit in a month and a half. You need to know what those milestones are and if the company is going to hit them. But most important, say experts, is to hold to the fundamental methods of evaluating a company's potential. You need to use your business acumen to come up with a model to determine whether or not you think the business model makes sense, and whether or not you trust that the people running the company have the ability to implement the model. If your company is already overexposed to dotcom risk, Moody's Konefal suggests taking the most conservative position possible when recognizing revenue from those customers.