We launched back in March with an expensive hardware product. For the first wave of manufacturing we needed some financial outsource so we got a 300K USD loan from an individual. We have had a good amount of sales, and now in order to speed up the process of manufacturing and scale we need a big cheque from the VC's. Now the question is, will that loan be a negative point for us? Or they will look at the process and the time to cashflow-positivity? We need to return the loan 6 months from now.

It's certainly not unusual to see debt on the balance sheet when we look at opportunities. I wouldn't let it hold up your process of trying to find additional new investors, as it can usually be worked around to all parties satisfaction. Having said that - a specific answer to your question would depend on a number of things, including the payback terms, cash on the balance sheet, amount you intend to raise, strength of the underlying business etc. VC's will not fund you $500K just to have $300K walk out the door in 6 months for example. Have you considered having your debt holder convert to equity along with the new investors?

Answered 5 years ago

Unlock Startups Unlimited

Access 20,000+ Startup Experts, 650+ masterclass videos, 1,000+ in-depth guides, and all the software tools you need to launch and grow quickly.

Already a member? Sign in

Copyright © 2020 LLC. All rights reserved.