Looking into venture debt options.

In general, most recommend raising equity instead of debt whenever possible. Treating debt like equity has potential negative unintended consequences, particularly in a downturn or if you’re a pre-product/market fit company. If you do decide to pull down venture debt, read your material adverse event clause (MAC) and understand it.

Here’s what Oren Michels (of Mashery) had to share here: “If you’re not cash flow positive, venture debt usually isn’t a great way to extend runway — so don’t expect to be anytime soon. You generally have to take down the money long before you need it, at which time you are using the money you borrowed to pay interest — and then you come out of the economic crisis with a massive monthly principal and interest payment. Should things not recover as quickly as you hope, it’s hard to cut back to a cash flow positive budget if you have to make debt payments,” says Michels.

Like any other bridge, venture debt should be a bridge to somewhere specific, or else you can wind up giving the keys to your company to the bank.

Source: https://firstround.com/review/the-founders-field-guide-for-navigating-this-crisis-advice-from-recession-era-leaders-investors-and-ceos-currently-at-the-helm/#text_228c0b23505346608a8d18197e528ba1