Welli founder Felipe Gómez Herrera raised $115M by understanding a crucial fintech rule: you raise equity to fund the company, but you raise debt to fund the product (your loan book). This requires two different pitches, two different types of investors, and a deep understanding of how to sequence your fundraise to maximize leverage and minimize dilution.
Key takeaways
- Separate your fundraising story: one for VCs (growth, TAM) and one for lenders (risk, yield).
- Use equity for team, tech, and growth. Use debt to finance your loan book.
- Secure your equity round first to de-risk the company for debt providers.
- Build a track record for your loan performance, even on a small scale, before approaching lenders.
- Hire a finance lead who understands debt covenants and structures early.
- The "right" investor is one who understands your specific business model (e.g., fintech in emerging markets).
The Two-Track Fundraise: Equity for Growth, Debt for Product
For most startups, fundraising means trading equity for cash to grow your team and tech. But for a fintech lender, that’s only half the story. When your product is money, you have to fund the company and the product separately. This requires a sophisticated, two-track fundraising strategy that many founders get wrong.
Felipe Gómez Herrera, founder of the Latin American healthcare fintech Welli, successfully navigated this complexity, raising a combined $115 million in equity and debt. His journey is a tactical playbook for any founder building a capital-intensive business, especially in an emerging market.
The core lesson: You raise equity from VCs to fund your growth. You raise debt from lenders to fund your loan book. These are different investors, different pitches, and different processes. Mastering both is critical.
First, Build Your Founder "Toolkit"
Investors don't just bet on an idea; they bet on a founder's ability to execute. Before he could raise $115M, Felipe had to assemble a unique set of skills and experiences that made him credible to both venture capitalists and institutional lenders.
The McKinsey Framework: Structured Problem-Solving
Coming from a public policy background, Felipe joined McKinsey with little formal business training. Consulting forced him to learn how to break down massive, unstructured problems into logical, manageable parts. For a fintech founder, this is a non-negotiable skill.
You’ll use it to deconstruct everything: your total addressable market, your underwriting model, your go-to-market strategy, and your financial projections. Lenders, in particular, need to see this structured thinking in your risk models and performance dashboards. They are betting on your analytical rigor.
The HBS Mindset: Shifting from "Can I?" to "How Will I?"
Business school, particularly an institution like Harvard, provides more than just knowledge. It provides a powerful mindset shift. Surrounded by peers and faculty launching and funding disruptive companies, Felipe’s ambition recalibrated. The idea of starting something himself moved from a distant dream to a concrete plan.
For many technical or first-time founders, this "confidence gap" is the biggest barrier. You need to internalize that you are capable of building a large, venture-backed company. This conviction is what you will project in every investor meeting.
The Unexpected Push: When a Layoff Becomes Your Seed Funding
Sometimes the riskiest career move is made for you. While helping launch Shopee's Colombian operations, the parent company made a strategic retreat, laying off the entire team. But this came with a severance package—six months of salary.
This wasn't just a safety net; it was pre-seed funding. It removed the "golden handcuffs" of a stable corporate job and created a finite window for experimentation. With his co-founder, Felipe gave himself three months to turn an idea into a company before looking for another job. This forced urgency is often the catalyst for real progress.
The Core Insight: Separating the Bank from the Banking Software
Felipe came from a family of doctors in Colombia. He knew firsthand that millions of people in Latin America delayed or skipped care because they couldn't pay for procedures upfront. While patient financing platforms like CareCredit were common in the U.S., the equivalent was missing in LatAm.
This was the problem. The solution was Welli, a platform to provide the financial infrastructure for clinics and patients. But building it meant creating two things at once: Raising a large, nine-figure round of "funding" isn't a single event. It’s a strategic sequence of attracting the right type of capital for the right purpose.
Step 1: Raise Equity First
You must secure your equity round before you can raise significant debt. Venture capitalists invest in your vision, your team, and your potential for 100x growth. Their capital is high-risk, expensive (in terms of dilution), and designed to be spent on building the machine: hiring engineers, marketers, and operators.
Your Equity Pitch: This is a classic VC pitch focused on a massive Total Addressable Market (TAM), a scalable technology platform, a unique go-to-market strategy, and an unfair advantage. You are selling the "software company." The story is about growth, not yield. For Welli, this was about becoming the dominant financial operating system for healthcare in Latin America.
Step 2: Use Equity to Build a "Pilot" Loan Book
Debt providers are not VCs. They are professional skeptics. They don’t invest in stories; they underwrite assets. To get their attention, you need to show them a performing asset—your loan book.
You must use a small portion of your equity capital (or a smaller, initial friends & family or angel round) to originate your first batch of loans. This acts as your proof-of-concept. You need to track performance religiously:
Origination volume: How many loans are you issuing per month? · Default rates: What percentage of loans are going bad? · Loss-given-default: When a loan defaults, how much is actually lost? · Repayment velocity: How quickly is capital being returned?
Even with just $100k-$500k in loans, you can generate the data that a credit fund needs to see.
Step 3: Raise the Debt Facility
With an equity round closed and a proven, data-backed pilot loan book, you can now approach debt providers. These are specialized credit funds or banks, and they live in a different world from VCs.
Your Debt Pitch: This is not a pitch deck; it’s a data room. You present your underwriting model, the performance of your pilot portfolio, your collections process, and the legal structure that protects their capital. You are selling a predictable, interest-bearing asset. The story is about risk management and yield, not TAM. For Welli, this was about showing how their patient loans were a safe, stable asset for lenders to park capital and earn a return.
A typical debt facility for a Series A fintech might provide $5 to $10 of debt for every $1 of equity you have on your balance sheet that is dedicated to backing the loan portfolio. This leverage is how you scale.
Common Founder Mistakes (and How to Avoid Them)
Mistake 1: Using Equity to Fund the Entire Loan Book. This is the most common and deadly error. Equity is your most expensive currency. Using it to fund a lending business that might generate a 10-15% net interest margin is incredibly inefficient and dilutive. VCs will see this as a sign that you don't understand financial fundamentals. · Mistake 2: Approaching Debt Funds Too Early. If you walk into a meeting with a credit fund with an idea but no loan performance data, the meeting will be very short. You need to have a live, performing portfolio, even a small one, to be taken seriously. · Mistake 3: Not Having a Finance Lead. The moment you decide to raise debt, you need someone on your team who understands how debt facilities are structured. VCs might be forgiving of a messy financial model; credit funds are not. They live in the details of covenants, borrowing base certificates, and security agreements. · Mistake 4: Confusing Your Pitches. Don't talk to VCs about yield and default rates. Don't talk to credit funds about your 10-year vision to change the world. Know your audience and speak their language.
How to Apply This This Week
Map Your Model: Is your business a pure SaaS model, or does it have a lending/financing component? Be honest about whether you'll need debt in the future. · Start a "Shadow" Ledger: If you have any lending-like component, start tracking its financial performance now. Create a simple dashboard showing origination, repayment, and default, as if you were reporting to a lender. This discipline will pay dividends later. · Create Two Decks: Build a "Vision Deck" for VCs (big market, disruptive tech, amazing team) and a "Data Deck" for lenders (portfolio performance, underwriting criteria, risk management). · Network with Fintech CFOs: Find a CFO on LinkedIn who has raised a debt facility for a startup in your sector. Offer to buy them coffee (virtual or real) and ask how they structured their first deal. Their advice will be more valuable than any blog post. · Research Debt Providers: Don't just build a CRM of VCs. Build a separate list of the credit funds and venture debt firms that invest in your stage and geography. The fundraising process for debt is its own distinct workstream.
Frequently asked questions
- What is a debt facility for a startup?
- A debt facility is a form of financing—essentially a line of credit from a bank or credit fund—that a company uses to fund revenue-generating activities. For a fintech, this is typically used to finance its loan book.
- When should a startup raise debt vs. equity?
- Raise equity to fund your team, technology, and growth expenses. Raise debt to fund a predictable, asset-backed part of your business, like a portfolio of loans, where the returns are lower and using expensive equity would be inefficient.
- Why can't I use venture capital to fund my startup's loan book?
- You can, but it's a huge mistake. Venture capital is expensive (you trade it for 20%+ of your company). Using it to fund a low-margin lending business will crush your ownership and is not scalable. VCs want their money used for high-growth activities, not lending.
- Who provides debt financing to startups?
- Debt providers are typically specialized credit funds, venture debt firms, and in some cases, commercial banks. They are not the same as venture capitalists and have a completely different risk and return profile.
