Opinion | Your Friendly Tech Bro Might Be Looking for a Loan

Like many V.C.s have done in recent weeks, Upfront Ventures’ Mark Suster posted this to help explain:

“There is nothing in the rules that state that V.C.-backed businesses are ineligible. There are certainly some people who are publicly saying that V.C.-backed businesses shouldn’t take government money. There are some businesspeople who think this is ethically wrong for a V.C.-backed business with a highly educated founder, and there are also likely to be some populist outcries that the money should have been reserved for Main Street workers and not tech workers.”

Bingo. When I texted with him after his post went up, Mr. Suster said that he thought every company should do what is best for its survival. “There are many tech start-ups that are hit by a sharp change in demand that are planning to lay off employees,” he said. “If the goal of the government is to protect jobs, then the P.P.P. loan program is a smart way to keep more tech people employed. We just need to make sure that start-ups don’t take advantage of it — it’s not ‘free money.’”

No, it is taxpayer money, which is why the idea rankles many people who don’t want to foot the bill for venture capitalists who then can keep their own powder dry for the inevitable turnaround. It is clear to many people I spoke with that many venture capitalists do not want to attract pitchfork anger from those who think the well-to-do of tech should permanently social distance themselves to the very back of the line.

That said, venture capitalists also do not want to hand out good money after bad, if there is to be a culling. Many I talked to this week argue that they have a duty to their investors, which often include public pension funds, so that they cannot put capital at risk for businesses that are now badly distressed.

One way of hedging is through something called a “bridge loan,” which is just what Airbnb, whose home-sharing business has been hard-hit by the coronavirus pandemic, has just announced. Airbnb’s deal — with the giant private equity firm Silver Lake, which recently swooped in to help Twitter’s Jack Dorsey out of an activist jam, and Sixth Street Partners — is a $1 billion debt and equity combo (and some reports say the new investors got an even better deal). Airbnb, which was planning on an I.P.O. this year that I would guess will be delayed, also recently lowered its valuation from $33 billion to $26 billion.

And if a star start-up like Airbnb has to bend, smaller companies have even less leverage, so a relatively strings-free government loan might look pretty good right about now.

That is clear from a recent Times article that quoted a Silicon Valley start-up adviser who called this “the great unwinding” — a perfectly apt term. The article noted that there were layoffs or furloughs of 6,000 workers at 50 start-ups. The piece also said that a major V.C. firm, Sequoia Capital, called Covid-19 “the black swan of 2020.”