Jawbone’s been having some problems both with product and with press lately, and those difficulties appear to be extending to corporate finance. Bloomberg reports that the company raised $300 million late last month from the private equity firm Blackrock, but that the round was debt, not equity.
It makes a difference. The loan is secured by Jawbone’s assets: intellectual property, royalties, receivables, and so forth. If the company runs into trouble, lenders — not investors — get first crack at the carcass. So if Jawbone hits the skids, it’ll be Blackrock — not equity investors Sequoia, Khosla, Kleiner Perkins, or Andreessen Horowitz — that will get paid first.
The $300 million is a significant portion of the $518 million that Jawbone has raised in its long history, according to Crunchbase. Interestingly, this is not the first round of debt that Jawbone has taken on: it borrowed $93 million in 2013.
As debt goes, Blackrock is a pretty solid lender. But Blackrock doesn’t play. It would behoove Jawbone to find a business and product plan and execute on it — something it’s had trouble with throughout its history.