Startup Funding Solving the Debt vs Equity Dilemma

The video features Felipe Gomez Herrera, founder of Welli, discussing crucial business launch tips and his journey from Harvard Business School to solving.

What this video covers

The video features Felipe Gomez Herrera, founder of Welli, discussing crucial business launch tips and his journey from Harvard Business School to solving healthcare access in Latin America. It also touches on startup funding, specifically the debt vs. equity dilemma.

Transcript

I think when you when you think of startups and then you think of VCs in general, you always have like the equity hat on and then you think like an equity investor. Um but for us it was equally important or perhaps even more important to just have access to these very large debt facilities, right? Um and it became a chicken and an egg problem, right? So on the on the equity side the equity investors want I mean, I would say they want to have clear knowledge that you're going to have access to debt. Uh but also they don't want to use equity dollars to pay for for for credits for financing, right? They always think like, "Hey, my equity dollars are worth a lot. You should be building like a great product with it. You should be hiring tech and so on. I don't want to to use that money for for lending, right?" And on the debt side, the incentives are completely different, right? They they

care about the downside more than the upside and then they want to see traction because they want to see performing credits, longer running cohorts and so on, right? So so the debt holders need equity, the equity holders need debt and how do you solve for that? So that was a tough one for us and I think it's a tough one for any company doing credit. Um And for us the the solution was I'll do friends and family first. I'll go for small deadlines mostly with local banks um and hopefully that will catapult ourselves to having first a large debt facility which will then unlock the equity.

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•By Alejandro Cremades