Debt is a double-edged sword, it can provide a lifeline for growth or can become a trap. For the startup venture debt, while equity funding winter looks prolonged and an unexpected meteoric rise in interest rates is here, tackling debt for loss-making startups can be a worry.

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We have seen Byju’s and PharmEasy looking for solutions to their leverage situation. Two experts join Big Deal, Gopal Jain of Gaja Capital and Ankit Agarwal of Alteria Capital, and tell CNBC-TV18’s Nisha Poddar that startups have to be more educated about debt-equity mix and usage of debt.

Agarwal highlighted the need for companies and startups to fully comprehend various forms of financing, encompassing both equity and debt. He underscored the importance of guiding startups in understanding the appropriate size of debt for their particular sectors and growth stages.

Most crucially, Agarwal emphasised the significance of tailoring the use case of debt to suit the unique circumstances of each startup. Alteria Capital makes it a priority to engage with companies, providing them with comprehensive insights into different financing options and helping them make informed decisions about when to opt for equity or debt financing.

Jain emphasised that it is essential not to generalise all startups as one homogenous group. While some startups are thriving and achieving great success, others find themselves navigating through challenging situations.

Jain acknowledged that a significant number of startups may face failure, but he also stressed that this experience should not be seen as entirely negative. In fact, the lessons learned from failure can prove invaluable, and some of these entrepreneurs may return with newfound knowledge to launch new ventures successfully.