Making money as a startup is hard, so these New Jersey companies are selling their financial losses in exchange for millions in cash
Most startups must go through years of unprofitability before they make it, if they ever do.The state of New Jersey offers a unique program that allows startups in the state to sell those losses for cash.
The program allows unprofitable technology startups in the state to sell their losses to more established companies, such as Bank of America and Suburu. Those companies can then deduct those losses from their taxable income, cutting the amount of money they pay in taxes. The NOL program, he says, has allowed TrueFort to avoid having to give up large chunks of the company or pay high prices to venture lenders. "This year in particular, uh, having access to the program was a fantastic lifeline to us," he said.
In the best of times a private placement can be expensive and cumbersome, says Mazzo. In the current environment that bad option may not even be on the table. "It has become increasingly hard over the last several years to do that," Mazzo told Insider,"today it's not so sure that you would get it done at any price."
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