Video: Why should you raise venture debt for your startup?
Today we’re talking about four reasons to do ventured debt if you’re a startup.
Now, the most important one is to extend your runway and make sure you hit all the key milestones the company needs to raise its next round of capital. That’s super important, that’s what it’s all about.
The second reason would be to refinance existing debt. When you raise equity it’s a great time to go back to the lenders refinance and extend your runway even further.
The third reason would be there’s a big new project or opportunity that you can pursue but you didn’t build into your budget so going and getting a little extra capital in the form of a loan is a great way to fund that new project.
And fourth, if you can just create a little bit of optionality in an acquisition process it can be really valuable. Using debt to do that is great that way you don’t have to reset the valuation like you would if you took new equity.
So, using a little bit of debt to extend your optionality and acquisition process is a great use of venture debt.