Convertible Notes and Startup Funding
February 12, 2025
The valuation of a sports franchise is a very difficult task. This is because a lot of the rules that are applicable while valuing other businesses are not relevant when it comes to valuing sports franchises. One such example is the widespread usage of the price-to-revenue ratio in deriving the valuation of a franchise. In […]
Homeownership has been at the center of every American dream for the past few decades. The conventional belief is that buying a home always turns out to be a good investment in the long run. This is the reason why owning a home is considered to be one of the biggest and the most important […]
After a firm has filed for bankruptcy, the court provides relief against creditors and even further lawsuits. However, this is a temporary situation. According to the court, the next step for the business is to re-organize itself. Now, reorganization is a broad term that could mean different things to different people. There have been bankruptcy […]
Profitability was always the core reason behind the existence of a company. For many businesses it still is. There is no way that businesses could continue to exist in the yesteryears without generating adequate profits. Only government companies could continue to make losses in the long run. As far as private companies were concerned, the […]
Debt financing is the most important source of finance for infrastructure projects. In most infrastructure projects, the majority of the project is funded using debt-based financial instruments. Equity holders invest a significantly smaller amount. However, they bear all the risks. The size and scale of debt financing make it an important decision for any company […]
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.
Your email address will not be published. Required fields are marked *