Venture Backed Startups Hit By Auction Rate Securities Disorder
Miscellaneous March 17th, 2008Quite a number of startups were advised to hold excess cash in instruments referred to as Auction Rate Securities. These assets, classified as AAA debt have recently been dragged into the lock-up of the credit markets.
In an effort to achieve enhanced returns on their cash, some startups are now finding themselves in a cash crunch. Some reports estimate that up to 20% of startups hold some of their funds in ARS, with some stories reporting holdings into the millions of dollars.
The lockup of the ARS market occurred in late February. In the event this evolves into as big of a problem as some are predicting it to be, we should here about more venture loans collaterized by the ARS taking place, in addition to hearing about some startups perhaps even going under.
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Loading ...Tags: ARS, Auction Rate Securities, Startups, Venture Capital
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March 18th, 2008 at 1:44 am
Nice writing style. I will come back to read more posts from you.
Susan Kishner