Convertible Notes and Startup Funding
February 12, 2025
The discipline of economics is generally valid for all industries across the world. This is because the basic fundamental economic principles of demand, supply, and free market are applicable to almost all industries in the world. There are only a few industries where these economic principles are not really applicable. The sporting industry is one […]
In one of the previous articles, we studied about covered bonds. We discussed how covered bonds are considered to be safer as compared to asset-backed securities. We also explained how having double recourse makes covered bonds virtually risk-free and gives investors the confidence they require to invest their money even if they end up getting […]
In the previous article, we have already seen that sponsorship is one of the predominant ways in which a sports league can generate revenues. However, it is important to note that sponsorships can happen at various levels. For instance, sponsorship can be given to an individual, a team, or even an entire sports league. In […]
When it comes to exchange traded derivatives, one of the first things that need to be understood is the margin mechanism. Since most people that use exchange traded derivatives also use leverage, this is the procedure that they have to follow. The process may seem to be complicated. However, it is one of the wonders […]
Dividend discount models are the first type of discounted cash flow models that we will study. The model simply discounts cash flows at a given rate just like any other DCF model. The difference lies in the fact that dividend discount models consider only “dividends” as being legitimate cash flows. Therefore, if a firm pays […]
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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