Should you issue debt instead of equity for seed financing

Venture Hacks has an article suggesting entrepreneurs should issue convertible debt instead of equity when doing seed financing.

Extracts
- Why is debt a great alternative to equity in a seed round? Convenience, suitability, control, cost, and speed.

- With convertible debt, the lender and your company both expect to convert the debt into equity when you close the Series A.

Interesting article and you should check out the discussion in the comments which included the following suggestion

If lenders are concerned about giving up a security (equity) interest in the assets of the company, consider securing it with founder’s shares instead (company has relatively few assets).

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posted by John Wilson @ 8:54 AM Permanent Link newsvine reddit



1 Comments:

At 6:22 PM, Anonymous Nivi said...

Hi, this is Nivi from Venture Hacks. Thanks for the kind words!

I thought your readers might want to know that we've got a Cheat Sheet of all our hacks.

 

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