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Hey I am on Medial • 1y

why indian Startups are opting for Debt financing? 1. Preserving equity: Debt financing allows startups to raise capital without diluting their equity and ownership. This is important for founders who want to maintain control of their company. 2. Tax benefits: Interest payments on debt are tax-deductible, making debt financing more cost-effective compared to equity financing. This improves the startup's bottom line. 3. Flexibility: Venture debt offers more flexible repayment terms and structures compared to traditional bank loans, allowing startups to customize the financing to their needs. 4. Access to additional capital: Debt financing can provide startups with working capital lines, credit facilities, and other forms of supplementary funding to support growth and expansion. 5. Equity funding challenges: With the recent slowdown in venture capital funding,startups are turning to debt as an alternative when equity is scarce. What do you think 🤔❓

11 Replies

Replies (11)

Havish Gupta

Learning by Trying • 1y

Another benifit is that because of debt financing, Startups utilizes the funds more properly rather than just focusing on growth

1 Reply

SamCtrlPlusAltMan
•

OpenAI • 1y

It was really a need, as I felt the amount of exorbitant capital some were taking from the market understood, how much they could pay. And where they really stand.

1 Reply

Anonymous 3

Hey I am on Medial • 1y

This is a natural market correction. Too much easy equity was floating around. Debt brings discipline. Good for the ecosystem in the long run.

1 Reply

Anonymous 2

Hey I am on Medial • 1y

Preserving equity is great, but don't forget the value VCs bring beyond money. Networks, mentorship, doors opening... debt can't give you that.

1 Reply

Anonymous 1

Hey I am on Medial • 1y

Interesting trend. But remember, debt means repayment. Many startups overestimate their ability to service debt. Like say in BYJU'S case.

1 Reply

Udyamee

Baki sab thik ? • 1y

I think it's good because it prevents founders from becoming blinded by unlimited incoming money from VCs. And with debt, founders utilize money as if it's coming from their own pockets.

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