I have an opportunity I am conflicted on, and would like to know people's thoughts. The offer is essentially a loan paid out to me over two years in monthly increments. The amount is roughly 70% of my current pre-tax salary. The purpose is to provide a "monthly income" while I work on building a company. I just completed my second year of investment banking, but have always had an entrepreneurial itch. This offer allows me to continue paying rent and feeding myself without having to worry too much about finances. The repayment mechanism is what makes this unique. Instead of fixed payments after two years, the repayment can come in two different forms. The first is a share of my future income, say 10% of my future income should I start earning a salary again (aka if my company fails). The other option is to convert the loan liability in to equity in my new company should it show signs fo success and the ability to raise a round of institutional capital. I am generally avoidant of debt, but this seems like a nuanced way to be able to start a company without sleeping on a friends couch and eating ramen noodles. I'd be interested in thoughts or concerns here as I think through my options.
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