I see many startups with ridiculous fundings, like 100M, 200M and when I look at their financials they are still not making a profit (maybe the first couple years but not after)
My questions are based gererally and not towards a specific company
Q1 : The years they didn’t make a profit, what happens?
Q2: if a startup fails what happens to the debt. If it’s an LLC, there is no liability owner. He doesn’t have to pay off the best right?
What happens when a startup fails?
byu/Environmental_Plum95 inEntrepreneur
Posted by Environmental_Plum95
4 Comments
Running a unprofitable company is a well-known way to launder money if that’s what you’re asking
7
That is why it is very important to form a proper llc or scorp in the event of failure, no one is behind you to pay up the debt.
This is AI answer “When a startup structured as an LLC receives funding but fails, it undergoes a formal dissolution process. The company liquidates its assets to pay off debts, following a priority order: secured creditors are paid first, followed by unsecured creditors, and then investors if any funds remain. Members of the LLC generally have limited liability protection, so their personal assets are not at risk unless they have personally guaranteed debts or engaged in wrongful actions. Investors may lose their investments, especially if liabilities exceed assets. Throughout the dissolution, the LLC must comply with state laws, notify all stakeholders, settle obligations, and complete final tax filings.“ so I guess nothing, nothing happens