Original editorial explainer / comment. Borrowing can reduce dilution but makes cash-flow discipline essential.
The context
Companies with growing revenue sometimes consider debt alongside equity. The attraction is that founders may retain more ownership, but lenders require repayment and may impose financial covenants.
Our analysis
A careful comparison includes interest, fees, warrants, liquidity reserves and the consequences of a missed milestone. The cheapest-looking capital may prove expensive when the operating plan slips.
What to watch
Any financing structure should be assessed with qualified advisers using the firm's own circumstances.
Editorial note: This is an original explainer, not a report of a newly investigated incident. It should not be read as a finding about any particular person or company.
We assess factual corrections and substantive responses. Verified changes are reflected in our reporting.
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