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Anonymous

Hey I am on Medial • 1y

Why founder think raising fund is an better option than taking debt ?

3 Replies

Replies (3)

Havish

. • 1y

It is a very simple answer 1) when we take debt, we are obliged to pay it. It doesn't matter that we make profits or not. We would have to pay it 2) but when we take funding, we get the funds by selling % of our company. So we don't have to pay the Inverster anything. He buys the stake so that when companies value increase, ge would sell that stake at higher cost. So even if the company goes bankcrupt, the founder doesn't have to pay the investor anything.

1 Reply

Nitesh Agarwal

5th Gen Businessman,... • 3m

dept has interest and not paying emis or interest on time result in bad Cibil.

Anonymous 1

Hey I am on Medial • 1y

Because a lot of early-stage startups don’t get loans or debts from banks hence they can only rely on funding from other sources.

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