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This might seem obvious, but it’s easy to miss when you’re a founder stressing over money. Venture debt is just borrowing money. That’s it. Nothing magic happens when you sign a term sheet. Customers don’t appear, churn doesn’t stop, funnels don’t get fixed. You just get capital with a repayment schedule, and it won’t fix your business any more than buying a scale will fix your diet.
I was brought in as the COO of a SaaS company when it was struggling with cash flow. The founder wanted to raise venture capital, but we attended an event where Victor Cheng explained how “we need money” is more often a symptom than a diagnosis. It saved us from going into debt over a scope problem that money couldn’t have solved.
If your startup is struggling, the first question shouldn’t be, “Where can we get venture debt?” It should be “What problem do we really need to solve?”
When your company is struggling, it’s easy to assume it’s about money. Funds are low. The runway is shrinking. Surely things would improve with more funds, right?
Not necessarily. Financial struggle generally indicates one of two things:
1. Your business is working, but cash flow isn’t.
2. Your business isn’t working reliably yet.
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