Just to be clear though debt is actually a preferred type of financing because it is one of the cheapest forms.<p>A venture investor is expecting a 10x return on their investment.  That means they are expected a much greater realized interest rate than debt - money that effective comes out of the pockets of the business owners.<p>If you can get debt, if is often preferred if you can figure out how to manage the default risk.<p>You do not give up equity (which could be worth a massive amount), rather you only have to pay back the debt at some future time with some much minor interest.<p>Also interest is often tax deductable, thus debt has further tax advantages.<p>One Nobel winning economic theory leads to an optimal capital structure of 100% debt: <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Modigliani%E2%80%93Miller_theorem" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Modigliani%E2%80%93Miller_theo...</a><p>Example: Apple is buying back shares (the opposite of equity funding), while issuing massive amounts of debt.