Convertible Notes and Startup Funding
February 12, 2025
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In the previous article, we have already studied about the concept of venture debt. We know that venture debt can prove to be a viable alternative for a start-up company that is looking to raise cash for a relatively short period of time. We also know how venture debt is different as compared to venture equity.
However, the decision to raise venture debt is not a small one. There are several pros and cons which need to be considered while raising venture debt. Some of these pros and cons have been mentioned below:
Venture debt is widely used by the entrepreneur community. This is because there are several distinct advantages of using venture debt. Some of these advantages have been mentioned below:
Although venture debt is quite popular amongst various entrepreneurs, there are also many cons related to it. Some of these disadvantages have been listed below:
The bottom line is that venture debt is generally preferred by start-up firms in the short run as a stop-gap arrangement. However, at the same time, the same firms would not want to use venture debt over a longer period of time.
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