Debt financing is problematic for a startup business since the firm is yet to

Debt financing is problematic for a startup business

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investors are the best choice for funding a new venture. Debt financing is problematic for a startup business since the firm is yet to service all its other debts and still lacks foreseeable income for repaying more debt. Besides, the firm's inadequate revenue and debt level render the organization too risky, thereby lacking creditworthiness. Moreover, venture capital is ideal for funding initial business stages since the firm benefits from management expertise. Finally, a loan represents the best choice for funding business expansion since the interest is tax-deductible. The concepts about entrepreneurship learnt during the Trikela Motors Company project could be applied in the case of the Black Obelisk Laundroid project developed by Seven Dreamers Company. The latter firm devised giant robot machinery for washing, drying, ironing, and folding laundry. However, the project failed during its initial stages due to inadequate financing. Additionally, it ran bankrupt and owned $20.1 million to its creditors. In this phase, Seven Dreamer Company's sources of capital included Series A and Series B venture funding, a venture round of unknown series, and loans (Summers, 2019). The use of loan financing in the
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WEEK 6 ENTREPRENEURSHIP 3 start stage triggered the collapse of the Laundroid project. The investors should have solely relied on equity capital since its repayment does not include interest, unlike loans (Fourati & Affes, 2013; Coleman, Cotei, & Farhat, 2016). Furthermore, the firm should have used venture financing to access management expertise. Remarkably, the firm should have employed loan
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