Convertible Notes and Startup Funding
February 12, 2025
Anyone working in the investment banking industry for a few years has definitely come across the term “leveraged buyouts.” It creates huge risks, as well as investment opportunities. Over the years, many investment banks have been involved in financing several big-ticket leveraged buyouts. In this article, we will explain in detail what a leveraged buyout […]
The National Stock Exchange (NSE) is one of the two leading stock exchanges in India. Ironically, the National Stock Exchange was created as a result of a huge scam which happened in the Bombay Stock Exchange (BSE). The regulators were of the opinion that the broker nexus in the BSE was too strong. Hence, in […]
Option pools are synonymous with startups. Founders, investors, and employees expect the company to have some sort of option pool arrangement. It provides startup companies with some much-needed leverage required to compete with established companies in the labor market. However, a large number of entrepreneurs are not clear about what option pools are and how […]
What is FinTech and how is it a Game Changer for BFSI firms? Anybody with a passing curiosity about the world of banking and finance and how technology plays an important role in the operations of such firms would surely have come across the term FinTech. Used in multiple contexts and with a wide variety […]
The past couple of decades has seen tectonic shifts in the way pension plans are being funded. Investors all over the world have been encouraged to shift from defined benefit pension plans to defined contribution pension plans. In the past, defined contribution plans were not considered to be pension plans at all. Instead, defined contribution […]
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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