Overlap 101 Video Series, Episode I: "All about Debt"

Happy pre-holiday season, everyone! We’re feeling extra-grateful for the milestones we’ve accomplished this past year in business as Overlap Holdings. And there’s even more to look forward to in the year ahead. In the meantime, we’ve been making some videos!

Welcome to our Overlap 101 video series—quick and digestible primers on topics that are well-known but less understood across tech and finance. We started recording them as an offshoot of our monthly Overlap 101 Office Hours, which in itself began as a way to share knowledge and expertise among members of the team.

What better way to kick off our Overlap 101 video series than by tackling the topic of debt? For many Americans, debt can have a (slightly to highly) negative connotation from experiences in their personal lives (for example, student loans or credit cards). But debt can also be an important tool for compounding your investment, whether in a home or in a company—as long as you have the means to pay it back.

Here’s the full video, along with a few of the highlights below.

Video

Our first Overlap 101 video breaks down the concept of debt—both in terms of homeownership and from a corporate perspective.

The Highlights

In this video, we look at debt through the lens of a homeowner (i.e., a mortgage), and a business (corporate debt).

The slide above demonstrates how a bank thinks of a home mortgage: less return on the upside, but lower risk if the price of the home goes down.

💡 The essential relationship between debt and equity is one of risk and return.

Now let’s take these concepts and apply them through a corporate lens.

On the left: a simple factory with an easy-to-understand capital structure—the owners financed 50% themselves and borrowed the other half from a bank. On the right, a much more sophisticated operation with a more complicated cap structure (and believe me when I say it gets a lot more complicated than this!).

To wrap up: a speed round on some different types of corporate debt (trust us, the full list is a lot longer…). In the video, we provide brief descriptions of the differences.

Thanks for watching our first Overlap 101 video! We’d love to hear your feedback—as well as your suggestions for topics to delve into from the worlds of finance and frontier tech.