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Anonymous

Anonymous

Stealth • 10m

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

Havish Gupta

Stealth • 10m

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.

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