Advantages of debt financing
There are numerous benefits an organization stands to enjoy due to debt financing. These advantages include the potential for greater investment on returns due the borrowing capability. Additionally, the opportunity cost is justified during the low-interest rates which can make the business to borrow more.
Disadvantages of debt financing
The growth and development of a business that relies heavily on borrowing can be limited, additionally, there need to pay a constant monthly interest that can be costly to the business. Apart from the need of paying interest, there is the problem of cash-flow which can increase when the business is responsible for paying back the borrowed amount.
Advantages of going public
An organization that goes public will have a good image have high liquidity. Going public gives a business the ability to access to the readily available stock hence high liquidity. Additionally, selling securities is one way of going public which gives a business an opportunity to raise a large sum of capital within as short time as possible.
Disadvantages of going public
The biggest challenge of going public is the cost realized. Going public will cost a business in terms of time, the money spent and the managerial requirement. Additionally, an organization will have to incur legal costs for the process which can take much time of the organization's activities.
Do Capitalists want too much?
It is not easy to decide on whether capitalists are greedy or not. According to me, however, I will say no. This is because every startup business will take every opportunity to capitalize on the opportunity they have to develop, which to some people, can look like they are greedy. Therefore, seeking new venture financing should be an opportunity for growth and not viewed as greed.
