A founder raising $2M at a $10M post-money valuation gives up 20% ownership permanently. If the same founder borrowed $2M as venture debt at 10% interest with 1% warrant coverage. Assuming a three-year term, the company would repay the $2M principal, pay roughly $600K in interest, and incur minimal dilution.

The distinction becomes clear when the company succeeds. On a $100M exit, that 20% stake is worth $20M. The debt lender, by contrast, receives only principal and interest.

So why don't all startups choose debt? Because debt must be repaid regardless of outcome. A company burning $150K per month cannot reliably service a $2M loan. Early-stage startups rely on equity because fixed repayment obligations are incompatible with uncertain cash flows.

Once revenue becomes predictable, the trade-off changes. A company generating $500K per month in recurring revenue can often use venture debt to reduce dilution and preserve ownership.

Alphabet is raising $84.75B by selling new stock to fund AI infrastructure.

The raise consists of $34.75B through underwritten public offerings, $40B through an at-the-market program beginning in Q3 2026, and $10B through a private placement to Berkshire Hathaway at roughly $350 per share.

The move reflects the unprecedented capital demands of AI. Alphabet said demand for its AI services from enterprises and consumers is "exceeding available supply," and the company expects to spend up to $190B in capital expenditures this year to expand capacity.

Sources: CNBC | TechCrunch | Reuters