Two Different Later Stage Raises

Two later stage Atlanta startup companies have recently raised significant amounts of money using different strategies. Airwatch raised $200M in a “Series A” equity round. Silverpop raised $25M in a debt financing round.

With yesterday’s Silverpop news, several people chimed in on Twitter agreeing that while debt financing might not be as seemingly glamorous as equity financing, there is a lot to be preferred in it. Here are some of the tweets along these lines:

Of course, if the valuation on the equity pricing is super great, then equity financing could easily be the better choice. Also, if there is not enough tangible value in the business to back up the size of the debt financing that is needed, an equity raise may be the only option to get as much money as some of these later stage companies are seeking.

These are two companies that are sure bets to have good exits in the coming few years. It will be interesting to watch as they prepare for IPO or M&A activity.

The dynamics of raising money at the later stages of a startup are much different than at the earlier stages and more rare. It is fun to be a student of their decision-making.

What differences have you noticed in the tradeoffs between debt and equity financing for later stage companies?

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