Venture Capital Fund Announces Bold New Strategy: Investing in Technical Debt

In a move that has stunned family offices around the world, disruptor venture capital fund DebtTech Ventures has announced a revolutionary new investment strategy: rather than traditional investments like shares or SAFEs, the firm will exclusively invest in technical debt.

"We’re not just following the market—we’re reinventing it," proclaimed CEO Rick Legacy at a press conference held via Zoom, as his screen intermittently froze and displayed the dreaded buffering icon. "Technical debt is the most undervalued asset class of the 21st century, and we’re here to capitalise on it."

The Allure of Debt-Driven Returns

While other venture capital firms are busy chasing unicorns and clean codebases, DebtTech Ventures is betting big on legacy systems, spaghetti code, and hastily patched solutions. According to Chief Investment Officer Sarah Lag, the firm has spent months analysing software infrastructures to identify projects with the most sprawling, convoluted, and fundamentally broken codebases.

"We’re particularly bullish on companies that have undergone at least three ‘quick-fix’ rewrites within six months," Lag explained. "The more undocumented hotfixes, the better. One of our favourite investments is a startup whose entire backend is written in three different programming languages—and no one knows why."

"We're extremely interested in vibe coding startups. While they might not know it yet, there is the potential for a huge amount of technical debt which only emerges after they try unsuccessfully to hire their first proper developer."

Win-Win for Founders

Founders have always been concerned about equity dilution, and investing in technical debt is the win-win solution to receiving investment without impacting the cap table. Most founders are happy receiving the cheque, not realising that it is a poor reflection on their historical development practices. One founder who spoke on the condition of anonymity described how their shareholders were thrilled at the idea of their PortCo being able to raise debt financing, "Any money that isn't diluting us is fantastic. It's well-known that debt financing is only possible for mature, successful businesses. Who knew this thing was mature? Or successful?".

On the investment side, technical debt has historically provided very attractive interest rates for investors. With bond rates in the low single digits, it is not unheard of for interest rates on technical debt to be 25%, sometimes upwards of 40%. With the benefit of compound interest, DebtTech Ventures expects to receive the fund back on every one of their investments, "Our debt ranks ahead of equity, so those pesky shareholders can kiss their 10x returns goodbye as far as we're concerned. They have to repay our technical debt before shareholders see a cent! Not to mention, they need to fix the code before they can issue a prepayment notice."

Compounding Complexity for Exponential Growth

DebtTech’s investment philosophy is rooted in the belief that the compounding complexity of neglected code will yield unparalleled long-term returns. Instead of agile, debt-free solutions, the firm seeks projects where engineers openly describe the codebase as "a haunted forest."

"We look for what we call ‘crisis pivots’—moments when a company needs to roll out features quickly, but the infrastructure can barely handle a login page," explained Lag. "Those are gold mines."

Unraveling the Debt Portfolio

DebtTech Ventures’ portfolio includes:

• PatchCo: A SaaS company whose codebase includes un-removed console logs dating back to 2012.

• QuickFix AI: A machine learning platform that abandoned its own AI model halfway through implementation, replacing it with a hardcoded decision tree.

• LegacyBankTech: An online banking service that still uses COBOL for its primary API.

DebtTech recently passed on a promising deal with Streamly, citing concerns that the company’s recent refactoring might result in "unacceptable code stability."

Tech Industry Reacts

Reactions from the tech community have been mixed. Some developers have lauded DebtTech’s willingness to embrace chaos, while others are less optimistic. "It’s like investing in a sinking ship because you admire the craftsmanship of the leak," one software engineer commented on a Reddit thread.

In a scathing tweet, industry influencer @CleanCodeCrusader wrote, "Technical debt isn’t an asset; it’s a liability disguised as a temporary solution. What’s next? IPOs based on unresolved Jira tickets?"

Looking Ahead: A New Frontier

DebtTech Ventures is confident that its strategy will soon become the industry standard. "Eventually, all technology companies accrue technical debt," said CEO Legacy. "By getting in early, we’re positioned to profit from the inevitable reckoning."

As for the future, DebtTech is reportedly exploring Debt NFTs (DNFTs)—unique tokens representing particularly notorious code bugs. One early candidate is a widely feared bug from PatchCo that accidentally emailed every customer the CEO’s grocery list. "They blamed AI, but really it was a simple copy-and-paste issue".

When asked whether their own website, which crashed midway through the press event, was itself an investment in technical debt, Legacy simply smiled. "You have to live the brand," he said.

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Benjamin Elias is an Angel Investor by day and satirist by night - a combination that explains why he's so familiar with both building software and making fun of it. His expertise spans enterprise software, digital transformation, and convincing VCs that his jokes about the Queensland tech scene are based on extensive market research. He lives with an unreasonable number of productivity apps installed on devices he mostly uses to write satire. Check out CollabSystems for more of Ben's writing.