What are your thoughts on venture debt, and how it may affect startup funding?

immad's avatar
3 years ago
Bad for many type of startups but a good option for some

A few types of business model have delayed revenue and venture debt (or any sort of debt) can make a lot of sense.

For example if you make a lot of revenue but most of your customers pay you after 90 days then having extra cash flow to cushion that is a no brainer.

For a company thats not making any revenue going down the debt route can lead to contraction of options. If things go south and you can't raise the next funding round then that debt can basically force you to shut down the company. Where as you would have more options available if you didn't have debt to service.

3 points

This question is part of an AMA with Immad Akhund.

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