Should I as a startup founder / CXO consider raising debt capital?
Yes. Raising debt capital is beneficial overall as it is non-dilutive and brings down the cost of capital for the business.
At what stage should I consider raising debt capital for my startup?
Start-ups can raise debt capital post completion of Pre-Series A / Series A funding.
Is it possible for my startup to raise debt capital without any hard collateral?
Yes. Security structures for start-ups are different when compared to more traditional businesses.
My startup is pre-profit startup. Can I raise debt?
Yes
Can I finance my start-up's marketing expenditure via debt lines?
Yes. Debt lines are available for financing marketing expenditures or other operating expenses.
Does the location of my start-up have any bearing on the debt solution available to me?
Geography of operation bears little to no impact on potential debt capital raise
How important is the quality of investors on my cap table?
Having top VC firms on the cap table is certainly a plus, however it does not assure a debt line. Several parameters like the industry, business model, burn etc. are taken into consideration by financial institutions.
BASICS
What approach should I as a startup founder/ CXO adopt while raising debt capital?
Debt Capital can be used for funding working capital, capital expenditure, and other business expenses. Debt can function as a safeguard against high equity dilution in the business.
Is venture debt the only effective solution to meet the debt capital requirement for my start-up?
A combination of debt products is typically more cost effective compared to only availing a venture debt facility.
Can I rely entirely on debt capital only to fund my start-up given that there would be no equity dilution?
The right mix of debt capital and equity capital work best for any business. Start-ups should ideally deploy equity capital in financing growth initiatives while deploy debt capital in catering to working capital needs as well as extending cash runway in certain situations.
How much debt can I raise for my start-up? Is it linked to the equity capital we raise?
Start-up debt raise need not be linked to equity capital raise. The quantum of debt capital that can be raised would depend on multiple factors such as size, stage of business, type (B2B, B2C) etc. and would require business specific evaluation.
Start-ups use debt capital only as a bridge between equity raise. Can I raise debt for business as usual?
Start-ups can raise debt capital as a bridge between equity rounds as well as for meeting the working capital requirements during business as usual scenarios.
My start-up has cash available only to fund burn for next 12 months, Can I raise debt at this stage?
Yes
APPROACH
Can my start-up raise debt facilities beyond venture debt?
Yes. Several debt solutions are available beyond venture debt.
Will a Bank lend to my start-up?
Yes, Banks lend to start-ups.
Which financial institutions would lend to my start-up?
Financial institutions which work with start-ups include NBFC's, venture debt funds, international debt funds, Private sector banks and Public Sector Banks.
Can I raise debt for my startup from any International financial institutions?
Yes. International financial institutions do extend debt to start-ups.
FINANCIAL INSTITUTIONS
FREQUENTLY ASKED QUESTIONS
Why should I work with Mount Peak capital when I have a qualified full-fledged finance team?
Raising debt facilities for start-ups requires specialised expertise as well as relationships across financial institutions. At Mount Peak Capital we help in accessing the right financial institutions, product customisation and commercial negotiations. Our expertise leads to better value creation in terms of pricing, structure, covenants etc for start-ups.
What is Mount Peak’s revenue model?
When it comes to our fees, we believe that there should be complete transparency and alignment of our interests. Therefore, our fees are linked to success of your fund raise. We do not charge any upfront fee or retainer for our debt fund raising activities.
MOUNT PEAK CAPITAL
What solutions are possible for my start-up via debt capital raise?
Several business goals can be achieved via appropriate debt solutions. Start-ups can meet working capital/capex/ operational expenses via. debt capital.
Can I raise off balance sheet debt facilities for my start-up?
Yes, we can structure supply chain solutions to be off balance sheet.
My start-up has large quantum of imports/exports, are there any solutions available for my business?
Both for imports and exports fund based and non-fund based facilities can be secured from financial institutions. For imports, debt facilities that enable prompt/upfront payment to international suppliers can enable better trade terms / pricing etc. For exports, receivables can be either discounted or factored.
Also, debt facilities for international trade can be made highly cost effective by linking them to a benchmark interest rate like Libor.
I plan to make considerable investments in land & building / office equipment / IT infrastructure etc. Are there any solutions other than plain vanilla borrowing for such investments?
Yes. Start-ups can opt for leasing solutions.
Is it possible to customise a product while raising debt capital for my start-up?
Yes, Start-ups can raise debt capital customized to the underlying business model.
Should I consider type of business while raising debt products for my startup?
Debt solutions and their appropriateness varies depending on type of business. A solution which is effective for a B2B business may not be as effective for a B2C or a D2C business.
SOLUTIONS
