Let me be honest. Before I read Arundhati’s story today, I knew nothing about this topic. Her story is about why more startup investors are veering towards a new model of funding through something called venture debt. 
 
Me, I barely understand equity financing. Cap table. Liquidation preference. Term sheet. Pre money. Post money. Extended universe. Crossover episode. Xbox 360 version. No clue. 
 
Anyway, after I read her story, I finally got it. If you know what venture debt is, you should click on the link at the bottom and head over to read the story. Save yourself. 
 
If you have no idea, read on. I have come up with a really tortured analogy. It’s too late for you now. Here goes. 
 
Startups need money. Usually to grow. Pay salaries. Things like that. And to raise this money, they need an investor. Now remember, this startup has nothing, so it can really offer just one thing—the promise of future returns. Give me money. Take a share of me. I will make it big. And we both will win. The investor looks them over, talks to them about their hopes and dreams, takes them out on a few dates and says, sure—take my money.
 
That’s equity financing. Invest in my potential, and in my future. Not the present.
 
But there’s another way to do this. Enter venture debt. Venture debt is where a company goes to an investor and says—look, I need some money. Take a teeny tiny share. Forget my long-term potential. I will pay you back. With interest. I am doing well. I have good prospects. Everything is secure. No, I don’t drink. Yes, I have a green card.
 
In other words, equity financing is like love marriage and venture debt is arranged marriage. Thank you for coming to my TED talk. 
 
Our story today is about why venture debt in India is not as popular a path for financing startups even though investors like Sachin and Binny Bansal, the founders of Flipkart, are taking an interest in it. Venture debt could be bigger, but there are some niggles as well. Partly regulatory. Partly a mindset. 
 
Partly because just like arranged marriage, venture debt simply isn’t for everybody.
 
You should read our story to find out more. Here: https://the-ken.com/story/whats-eating-venture-debt-in-india/

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