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What Founders Should Know About Raising Debt
For fintech lending companies, capital is akin to inventory, since they effectively sell capital to customers to generate revenue. The more you grow your originations ($ volume of loans created), the more revenue you generate in the form of interest and fees. Since loan origination is the key revenue driver, new fintech lenders typically need to raise more capital earlier. We’ve seen a recent spike in new fintech companies looking to raise debt in order to fund new financial products while minimizing dilution. Traditional venture debt facilities, such as term loans, aren’t optimized for the scaling needs of fintechs, and we’re seeing more and more fintechs turn to asset-backed debt, such as warehouse facilities—and more and more lenders.
With so many lenders to choose from across so many…
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