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Vaibhav Babruwan Shingde

Stealth • 5m

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 replies14 likes

Replies (11)

Udyamee

Stealth • 5m

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.

0 replies1 like

SamCtrlPlusAltMan
•

OpenAI • 5m

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 replies1 like

Anonymous 3

Stealth • 5m

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 replies1 like

Havish Gupta

Stealth • 5m

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

1 replies2 likes

Anonymous 2

Stealth • 5m

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 replies1 like

Anonymous 1

Stealth • 5m

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

1 replies1 like

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Amit Kumar

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When startup go for funding they get their funds from investors for some equity so if the enterpreneur gives his equity to the investor so in next funding round do investor has to dilute their equity too? or just the enterpreneur?

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