Impact Partners reposted this
For many fast-growing startups, access to capital is a primary concern. While venture equity is often sought after, many founders may underestimate the time it takes to secure funding (typically 6-12 months or more). Given the current challenging environment, management teams should plan for even longer fundraising cycles. That said, those who can raise equity should also consider debt as a minimally dilutive alternative. One of the benefits of debt financing is that it can typically be obtained more quickly than equity. For example, founders of late-stage companies on a path to profitability should plan for around 2-3 months to secure funding. This timeline depends on factors such as the complexity of the business, the lender's requirements, and the startup's preparedness. For those interested in exploring debt, the steps involved in the process include: ✅ Preliminary discussions: Discussing the business plan, funding needs, and lender’s criteria. ✅ Negotiating the term sheet: Reviewing the terms and conditions of a potential loan. ✅ Due diligence: The lender reviews your financial statements, business model, and management team. ✅ Documentation: Addressing the legal aspects of the loan agreement. ✅ Funding: Finalizing any remaining conditions and disbursing the funds. While debt can provide faster funding, it's important to remember that it doesn't happen overnight either. Knowing how long it takes to get funding and having realistic expectations for whichever route you choose is incredibly important. If you're considering debt as a founder, be sure to have all your documentation prepared in advance. This can speed up the process and help lenders see that you are organized and ready.