Business
Why I’m using a credit facility to grow my startup
When it comes to financing, startups and established organizations will have vastly different experiences.
Traditional financing may not always be available to high-growth startups, and even when it is, it often depends on the founder’s personal financial picture and their company’s existing revenue. While larger companies can turn to banks and other financial institutions, new founders often have to turn to alternative sources of financing to grow their companies.
For my own company, I decided to look at alternative financing options to scale operations and expand our product road map. To accelerate growth, I decided to raise a small amount of debt equity in tandem with a large, revolving credit facility.
Here’s how and why I’m using a credit facility to grow my company.
Raising a credit facility
To start things off, I approached a small lender who was able to provide a $3 million credit facility.
Banks often can’t offer a line of credit to a startup or small business, especially to those that don’t have years of operating history, given their legacy approach to underwriting.
It was therefore clear to us that we needed to offer lines of credit for our customers. Our credit facility allows us to extend lines of credit to our customers, ramp up our product offerings rapidly, and incorporate that debt into our capital stack in a way that minimizes the long-term cost of capital, which that makes clear sense for our business.
To expand our offerings, I turned to alternative financing: In October 2021, we closed a $77 million funding round, of which $75 million was a revolving credit facility and the remaining was in equity. Later this year, we’ll finalize an all-stock acquisition to further enhance our technology and product road map.
How we did it
For our business model, raising a credit facility to fund all of the spend for our customers made the most sense.
-
Entertainment7 days ago
iPad Pro 2024 now has OLED: 5 reasons this is a big deal
-
Business6 days ago
Checkfirst raises $1.5M pre-seed, applying AI to remote inspections and audits
-
Business5 days ago
AI chip startup DEEPX secures $80M Series C at a $529M valuation
-
Entertainment4 days ago
Jinkx Monsoon promises ‘the queerest season of ‘Doctor Who’ you’ve ever seen!’
-
Business3 days ago
StrictlyVC London welcomes Phoenix Court and WEX
-
Business5 days ago
Retell AI lets businesses build ‘voice agents’ to answer phone calls
-
Entertainment4 days ago
'House of the Dragon' recap: Every death, ranked by gruesomeness
-
Entertainment5 days ago
8 reasons ‘Evil’ is the greatest show you’re not watching