4 ms·
Steve Blank's "accelerator" view of VC financing begs this question: why not raise debt instead of equity? Any banker will agree that equity is the worst way
by johnrob 17y ago
Steve Blank's "accelerator" view of VC financing begs this question: why not raise debt instead of equity?
Any banker will agree that equity is the worst way to raise funds. It's a fair deal if the investor is taking a risk. But if you really have a working business model, that "just needs money", I don't think there is that much risk... normally the risk is the discovery of that model.
- jlm382 17y agohmmm... thats a good idea. If you're running a profitable business that just wants a little money to grow, and you know you'll be able to pay that back, then debt might just be the better (and lower risk) way to go. But obviously, lower risk means lower returns. Why else do VCs ask that you have more "traction"? They want lower risk for themselves, yet being able to insure that they'll maximize their returns. Pretty good deal for the investors, if you ask me.
- drc1912 17y agoTo the above poster, I believe you meant debt is the lower cost way to go, not lower risk.