Better way Quote by Jonathan Haskel
““The final way to respond to the difficulty of lending against intangibles is the most radical. It is for businesses to change their finance mix: specifically, to rely more on equity and less on debt. Should a business fail, equity owners have no recourse - they get nothing - so can afford to be relatively insouciant about the liquidation value of a business's assets. This makes equity a better way of funding businesses with few tangible assets.””
About This Quote
Source Speech: Financial Stability Report, Bank of England, 2023
Equity financing is safer for firms with few tangible assets because owners risk losing everything, reducing focus on liquidation value.
In simple terms: Equity is safer for asset‑light firms.
Key Takeaway
Use more equity, less debt for intangible‑heavy businesses.
Themes
finance
risk management
equity
intangible assets
business strategy
Mood
cautious
analytical
Type
advisory
strategic
When to use this quote
- startup funding
- tech company financing
- venture capital
- private equity
- corporate restructuring
Key Concepts
capital structure
moral hazard
asset valuation
Questions to Reflect On
- How does equity dilution affect founder control?
- When is debt still preferable?
A Different Perspective
Equity may be costly and dilute existing owners, limiting its practicality.
