Is it generally considered a financially-sound thing to do for one to borrow money to invest in a business venture, which may not be their own? For example, Jane borrows $50K to put in to a startup and agrees to get a percentage of the equity. The goal here is to get a share of the revenue.
Obviously, she can pay this back eventually regardless since she has another income stream(s) available, but anticipates that the business will grow to the point where her share of equity is large enough to reach her financial goals and repay the loan with zero problems. Other questions deal with this topic, but solely for borrowing to invest in stock markets/etc. What about for business ventures?
The difference here would be that the loan is to invest in another or other businesses, not one's own.
The deal is to invest and get a guaranteed equity stake, and hope the company performs better and increases its profits/revenues. I guess the investor could help run the business as well, but that's for another discussion. In general, what is the word on borrowing to invest in a venture for equity?
It's clearly a risk, but is it any different than investing in your own business? I don't think so, but...?