A deep dive into building and scaling a company with equidebt at LetsIgnite 2023

Key takeaways from an insightful discussion on building a company with equidebt at LetsIgnite 2023, India's largest conclave for startup investors.

1) Equity and debt are very different forms of capital. Equity doesn’t need to be repaid while if you don’t pay for your debt, you die.

2) Debt is much cheaper than paying with equity. The easiest case of taking a debt is when that debt will lead to profitability. Equity can’t be replaced by debt. They’re complimentary. ‍

‍3) However, debt must be used judiciously and effectively and not as a blanket case. There are as many as eight different use cases for debt, and possibly even more.

4) When to take debt:

- When your unit economics are positive, and the capital will help you get to positive EBITDA.

- When you have a low-risk burn (sellable assets)

- When there is asymmetric information between you and potential equity investors. For instance, when the world thinks of you as high-risk but you know you’re low-risk burn – this requires tremendous confidence in your thesis).

5) When not to take debt:  

- When you cannot forecast your revenue

- When you intend to pawn the burden of this debt to future investors

- Just because you cannot raise equity

Catch the complete discussion featuring Ishpreet Singh Gandhi, Founder, Stride Ventures and StrideOne; Ritesh Banglani, Tech VC, Stellaris Venture Partners; Punit K Goyal, Co-founder, BluSmart; Srikanth Iyer, Co-founder and CEO, Homelane; and Vaibhav Vardhan, CEO, Inc42 Media.