I've seen both sides of this equation working with founders for years.
Here's what most people don't understand about debt vs equity
When you raise ₹10 Cr in equity:
→ You give up 15-25% ownership
→ Board gets 2-3 seats
→ Quarterly board meetings become mandatory
→ Every major decision needs investor approval
→ Growth targets become non-negotiable
→ Exit timeline gets fixed (5-7 years max)
When you raise ₹10 Cr in debt:
→ You keep 100% ownership
→ No board interference
→ Monthly repayments (that's it)
→ Build at your own pace
→ Exit on your terms
But here's the catch most founders miss.
Getting approved for ₹10 Cr debt is actually harder than raising ₹10 Cr equity.
Banks and lenders put you through ultimate scrutiny:
👉🏼 18 months of consistent revenue
👉🏼 Positive cash flows
👉🏼 Clean credit history
👉🏼 Healthy margins
👉🏼 Predictable business model
If you get approved, it means you're doing everything right.
Your business is sustainable.
Your unit economics work.
Your cash flows are predictable.
That's validation no VC pitch deck can provide.
Who should consider debt over equity?
[1] Revenue Stage Companies:
- Monthly revenue > ₹50L
- Positive unit economics
- Clear growth path
- Predictable cash flows
[2] Asset-Light Businesses:
- SaaS companies
- Service businesses
- D2C brands with inventory financing
[3] Founders Who Value Control:
- Want to build long-term
- Don't want board pressure
- Prefer steady growth over hockey stick
The hard truth? Most startups aren't ready for debt.
And that's okay.
But if you are, debt gives you something equity never can: complete control over your destiny.
I've worked with founders who chose debt over equity at the right time.
They built sustainable businesses.
They maintained control.
They exited on their terms.
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Building a sustainable business?
Let's evaluate if debt financing fits your growth stage.
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