Your typical investment is just that, an investment.
Therefore, it is at risk and if the startup fails, the money is lost. Qualified/Accredited investors (non friends, family, fools) are required to have such high net worths/income to prove that they can accept these losses.
Even if it were debt, if it was not personally secured, (and there weren't any shady and extremely wasteful actions by the management), the company / startup has $0 in assets when it fails, and therefore can not pay its obligations.
Add'l info : Accredited Investors by the SEC must have 200k annual income and 1mln+ 'liquid' assets
Comments
Your typical investment is just that, an investment.
Therefore, it is at risk and if the startup fails, the money is lost. Qualified/Accredited investors (non friends, family, fools) are required to have such high net worths/income to prove that they can accept these losses.
Even if it were debt, if it was not personally secured, (and there weren't any shady and extremely wasteful actions by the management), the company / startup has $0 in assets when it fails, and therefore can not pay its obligations.
Add'l info : Accredited Investors by the SEC must have 200k annual income and 1mln+ 'liquid' assets
Thank you, so startup company doesnt have to pay anything back if they have $0 in assets and failed? Am I right? In a usual use case of course.
You are right.
The outside case for this is if you use your personal credit to secure an office building, car, or other loans (bank)