So after seeing "The Big Short" I see a similarity between 08 and present day.
All the loans being given to privately held unicorns, are those going to cause the next economic problem? To me it seems like they're getting their initial capital via crowdfunding -and then getting a business loan from xyz bank.
If they company does fuck all and defaults on it's debt, what happens?
Unicorns are largely VC funded and have limited debt to default on. At worst the equity value goes to 0 and the private investors get hosed.
There are a lot of movements to allow regular people to invest in private markets though and if that happens then unicorns could become a systemic risk, eg if too many retards buy uber shares because it's cool
That risk has already been in public markets for a while (see: enron, worldcom) but private markets are reeeeeeally sketchy
Not much. Public reporting for private investment funds is light. Only the govt and the investors know for sure. I dont think Uber even provides audited financials to investors.
But the VC fund itself is almost entirely equity funded by its sponsors. The company's debt is almost entirely convertible and will be converted, because conventional debt kills low rev growth companies. Any leverage will come from the directors lending money directly on favorable terms, and then converting to equity if it pays off, or postponing the due date if it doesn't.
As for where the VC fund gets its funding, that's anyone's guess. I would assume it's mostly liquid, or secured against investments, because private bankers are not as retarded as retail bankers. But it's possible that private bankers are lending absurdly large, unsecured lines of credit to their customers.
Even then it would just look like a baby version of 2008: the private market now is much smaller than the combined real estate + MBS + CDO market was pre-crisis.