• Email Us: [email protected]
  • Contact Us: +1 718 874 1545
  • Skip to main content
  • Skip to primary sidebar

Medical Market Report

  • Home
  • All Reports
  • About Us
  • Contact Us

Debt versus equity: When do non-traditional funding strategies make sense?

September 8, 2021 by David Barret Leave a Comment

David Friend
Contributor

Share on Twitter

David Friend is a serial entrepreneur, six-time founder, and the current co-founder and CEO of cloud storage company, Wasabi Technologies.
More posts by this contributor

  • Brand power vs. product power
  • The herd sours on unprofitable unicorns again

The U.S. produces more new startups and unicorns each year than any other country in the world, but 90% of startups fail, with cash flow often being a major challenge.

Entrepreneurs trying to raise funding for their new businesses are faced with a maze of options, with most taking the common route of equity rounds. There’s clearly a lot of venture money to be raised — and most tech entrepreneurs happily take it in exchange for equity. This works for some, but too often founders find themselves diluting their equity to unrecoverable portions rather than considering other financing options that allow them to hold on to their company — options like debt capital.

Even if you’re growing quickly, not all founders want to set a valuation for their company. In that case, you can offer investors “convertible debt.”

Despite the VC flurries of 2020 creating an ecosystem of seemingly endless equity, it’s important for entrepreneurs and founders to understand that there is no one-size-fits-all model for raising capital. Debt capital, which refers to capital raised by taking out a loan, is an alternative route that entrepreneurs should consider.

Understanding the real cost of venture debt and when it makes more sense than the traditional equity route relies on an understanding of what you and your company hope to achieve.

Understanding your goals

We mainly see two kinds of startups today: Those that want to try something new, and the ones that focus on making things faster, cheaper or simpler. Facebook, Twitter and Instagram are good examples of the first kind — social media didn’t exist before the internet. Discount airlines, cell phones (not smartphones) and integrated circuits are good examples of the “faster, cheaper, simpler” variety, because they simply displaced familiar incumbents.

Many entrepreneurs are eager to be the next “try something new” success story, and I applaud them for feeling that way. Carving out your own market is a fast-track to entrepreneurial stardom if you’re successful. But unless your main goal is to be famous, it’s often impractical and distracting.

People tend to think that category creation is less risky than incumbent disruption. However, as long as you’re truly faster, cheaper and simpler, patience and strategy can propel you to where you want to be.

 

Just as there are different market approaches, there are a number of funding strategies that work best for your goals. Landing investments from leading VC firms has benefits and is a good avenue to opt for if you’re a young startup carving out a market and in need of validation and experience. These firms bring trusted advisers that are laser-focused on growth and have the resources and experience to navigate the murky waters of category creation.

Source Link Debt versus equity: When do non-traditional funding strategies make sense?

David Barret
David Barret

Related posts:

  1. Tennis – Azarenka calls for mandatory COVID-19 vaccinations
  2. Apple offers small concession in easing App Store rules for Netflix, others
  3. U.S. weekly jobless claims fall; layoffs at 24-year low
  4. Explosion snags $6M on $120M valuation to expand machine learning platform

Filed Under: News

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

  • Are There Body Parts You Can Live Without? Find Out More In Issue 37 Of CURIOUS – Out Now
  • New Study Unearths Humanity’s “Hidden” Crossings Out Of Africa
  • Trichonephila Clavipes: The Spider That Spins “Golden” Silk
  • The Southern Delta Aquariids And Alpha Capricornids Meteor Showers Will Dazzle The Skies Together Soon
  • Virus Found In Black-Eyed Pea Plants Could Be Used To Treat Cancer
  • Many People Have No Idea Where Oil Actually Comes From. It’s Not Dinosaurs
  • “World’s Rarest Elephant”: Meet Motty, The Only Known Elephant Hybrid
  • Missing 40 Percent Of Matter In The Universe Finally Discovered, Could We Be On Track For A Universal Cancer Vaccine, And Much More This Week
  • Solar Power Producing Heliostats Could Get A “Night Job” Finding Asteroids
  • COVID-19 Can Lead To Build Up Of Alzheimer’s-Linked Protein Clumps In Eyes And Brain
  • The Wild Life Of Snowflake, The Only Albino Gorilla Ever Known
  • Stunning Drone Footage Reveals Largest Turtle Nesting Site In The World, Containing 41,000 Females
  • New “Different Form” Of Type 1 Diabetes Found In Sub-Saharan African And Black American Patients
  • Neanderthals May Have Feasted On Maggots, Which They Harvested From Rotting Flesh
  • Common Cannabis Substitute May Be Far More Psychoactive Than Previously Thought
  • This Is The Most Bizarre International Border In The World
  • Earth Will Not Fall Into Darkness Next Week – But There Is An “Eclipse Of The Century” In 2027
  • 850,000-Year-Old Remains Suggest Prehistoric Child Was Decapitated And Eaten By Its Own Kind
  • How To Watch The ISS As It Crosses The US Night Sky In The Next Few Days
  • “Robo-Bunnies” Are Florida’s Newest Weapon Against Python Invaders
  • Business
  • Health
  • News
  • Science
  • Technology
  • +1 718 874 1545
  • +91 78878 22626
  • [email protected]
Office Address
Prudour Pvt. Ltd. 420 Lexington Avenue Suite 300 New York City, NY 10170.

Powered by Prudour Network

Copyrights © 2025 · Medical Market Report. All Rights Reserved.

Go to mobile version