3 ms·
Both answers are correct, and make sense. I guess my question is fundamentally: is this a problem of supply (i.e. - not a lot of appetite to fund debt at these
by charlesbonello 13y ago
Both answers are correct, and make sense. I guess my question is fundamentally: is this a problem of supply (i.e. - not a lot of appetite to fund debt at these levels) or one of demand (entrepreneurs just prefer equity).
- danvoell 13y agosupply. Banks theoretically would provide debt to a company with 1mm in revenue, as long as they show the ability to cover the debt payments. But those companies typically can raise more money based on equity than debt.
- charlesbonello 13y agoSo the concern is that a debt financing would be smaller than a potential equity financing by some order of magnitude, as it's constrained by trailing cash flow rather than future opportunities?