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Fundraising: The Power of 360° Financing

"I want to raise funds; would you recommend equity, debt, or both?"

For a long time, people have pitted equity against debt, as if you absolutely had to choose one or the other to finance your growth. Yet, combining them is how you achieve the best financing strategy. Why? Because one reinforces the other.

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Understanding the balance between Equity and Debt

Equityequity (or raising capital) increases a company's shareholders' equity and sends a strong signal to the market: the structure is financially sound. This contribution improves the company's solvency, which can play a decisive role in obtaining bank financing. This is where bank debt (or non-dilutive financing) comes into play.

Using both simultaneously creates what is known as leverage. In practical terms, by increasing your equity, you improve your solvency ratio, which makes your company more attractive to lenders. The result: banks and other financial institutions trust you more, and your chances of obtaining non-dilutive financing increase.

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The 360° financing strategy

What strategy should you adopt? It’s not just about raising equity or seeking non-dilutive financing separately. The real secret lies in the timing.

Here is the step-by-step approach:

1. Start your non-dilutive financing (debt) process at least one month before closing your equity round.
2. Why? Because a financing application cannot be put together in a morning and requires several elements: administrative documents, Financial business plan, credit memo, BPI appendix, etc. At the same time, you need to identify the contacts to whom you will send your application.
3. Negotiate with banks and the BPI simultaneously: momentum.
4. The momentum created by the arrival of new equity works in your favor. Lenders will be more inclined to offer you financing at that time. Conversely, if you wait 6 or 12 months after the fundraising, the cash already spent could discourage them. Result: you have missed the opportunity.
5. Finalize everything at the same time.
6. The goal is to synchronize the closing of your equity fundraising with obtaining your non-dilutive financing. By doing this, you maximize leverage and can focus on operations and growing your revenue.

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Why not separate Equity and Debt?

One in three start-ups goes under due to a lack of funding. So why deprive yourself of a source of financing that, moreover, costs you less than equity? Raising debt allows you to retain a larger share of your company while ensuring growth.

To better understand this mechanism, we have prepared a cheat sheet schematically explaining the key steps to implement this winning strategy! 👇

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