As Startups Mature, Debt Markets Beckon

TechCrunch

Editor’s note:Malte Susen and Ariadna Masó are both working as debt investment professionals at international corporate and investment banks. 

As debt financing professionals, we have witnessed hundreds of challenging loan and bond financings for larger businesses. A company’s financing can be pivotal to its success, yet executives often struggle to optimize capital structures for their firms. In this context, why do the vast majority of start-ups think exclusively in the equity sphere?

Debt is not normally the first option that entrepreneurs consider for their ventures due to its common association with larger, established companies. However, a number of companies such as FastPay, Netflix, Teads and Uber recently made the move to seek additional venture financing through debt.

Moreover:

Venture backed companies are raising ~$10 billion (equity) per quarter.. If the VC industry alone were to attempt to fund all current VC backed companies at today’s levels…

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