In the latest season of Shark Tank India, there has been a noticeable uptick in the offering of debt deals to contestants.
Debt financing entails borrowing money that necessitates repayment over time, typically with interest. Conversely, equity financing entails selling shares of the company in exchange for capital.
The decision between debt and equity financing hinges on various factors, including the business's financial standing, growth stage, risk appetite, and long-term objectives.
Founders and small business owners often lean towards debt financing to retain full control over their startup.
However, lenders may impose covenants or restrictions that can impact business decisions.
Equity financing alleviates the pressures associated with debt but may entail relinquishing some individual control over the business. Ultimately, the choice between debt and equity financing is not a one-size-fits-all solution.
The optimal funding option is contingent upon factors such as the startup's characteristics, industry dynamics, managerial expertise, network, financial metrics, and growth trajectory.
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