💲 Debt Vs. Equity 💲

Should I be raising debt or should I be raising equity?

Here is a simplified way to answer this for yourself >

Most entrepreneurs have asked me this question as they believe that the only difference is if they will be asked/ able to repay.

The sad truth is –

If you don’t think you will be able to repay, neither is right for you.

👇🏼 Here’s the right way to think about it >

Ask yourself these questions >

👉 What is the yield of making these investments? Can they be quantified today?

Yes > Consider Debt.

No > Consider Equity.

👉 Is this being spent to create a market or better profit from it?

Create a market > Consider Equity.

Profit from it > Consider Debt.

👉 Is there something more than capital you need – say strategic guidance?

No > Consider Debt.

Yes > Consider Equity.

👉 Can you plan granularly how it will be expended & what the ROI is?

No > Consider Equity.

Yes > Consider Debt.

A good well-structured fund-raise always factors a healthy mix of both.

Equity - to help build the market.

Debt - to profit from it.

Remember, Equity is & will always be 2x more expensive than debt – just that you don’t pay for it today.

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