

How to get a 28.9% risk-free after-tax return: Looking at Debt repayment as an Investment. - danteembermage
http://www.thesimpledollar.com/2008/08/03/looking-at-debt-repayment-as-an-investment/

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charlesju
Kind of off topic, but I'll give it a shot.

Yeah, I think that paying off your debt is a smart thing to do. Likewise, I
think debt is a great leverage tool if you can shelter yourself with some sort
of limited liability company (c-corp, LLC, etc). At that point, there truly is
very little risk with your personal assets, and all the benefits of leveraging
the debt. (Unless you're being abusive with the limited liability, then you'll
probably get pierced)

And now how this relates back to Hacker News and startups in general is that I
think there should be further exploration into using debt instead of funding
to grow a company. If your startup is making money and is seeking funding only
to grow, perhaps you should look into debt. Especially after sealing a series
A, I think most banks are very eager to sign on with agreeable interest rates.
As startups either grow exponentially or burn out and die, this maximizes
returns by refusing to dilute your stock with VC funding and still having the
proper capital leverage to get to your next milestone.

What do you guys think about debt funding?

