Why I’m using a credit facility to grow my startup

There will be vastly different experiences when it comes to financing.

It is not always possible to get traditional financing for high-growth startups, and even when it is, it depends on the founder's personal financial picture and the company's revenue. While larger companies can turn to banks and other financial institutions, new founders often have to turn to alternative sources of financing to grow their companies.

I decided to look at alternative financing options to scale operations for my company. I decided to raise a small amount of debt equity with a large revolving credit facility in order to accelerate growth.

I use a credit facility to grow my company.

Raising a credit facility

To start things off, I approached a small lender who was able to provide a $3 million credit facility.

Banks often can't give a line of credit to a startup or small business because they don't have years of operating history.

We had to offer lines of credit for our customers. Our credit facility allows us to extend lines of credit to our customers, ramp up our product offerings rapidly, and incorporate that debt into our capital stack in a way that reduces the long-term cost of capital, which makes sense for our business.

In October of 2021, we closed a funding round of $77 million, of which $75 million was a revolving credit facility and the rest was in equity. We will finalize an all-stock acquisition later this year to further enhance our technology and product road map.

How we did it

Raising a credit facility to fund all of the spend for our customers made sense for our business model.