The Problem
You need capital to scale operations, launch a product, or acquire a competitor, but you are unsure whether to take on debt or dilute your ownership with equity.
The Solution
A quantitative cost-of-capital analysis aligned with your long-term exit goals.
Choosing how to fund growth shapes your company’s future capitalization and control. Equity capital brings cash without immediate repayment pressure, but it dilutes your ownership stake and future returns. Debt capital keeps you in control, but introduces fixed monthly obligations that can stress your cash flow if growth stalls.
To evaluate your options, look at your debt service coverage ratio (DSCR):
DSCR = Net Operating Income/Total Debt Service
If your predictable, operational cash flow covers this ratio with a safe cushion (typically greater than $1.25$), debt may be a cost-effective choice that preserves your equity. If your revenue is variable or long-term, equity might offer the runway you need without default risk.
