Would raising operating capital be reasonable if it has something to do with capex such as purchasing servers.
The startup's technology is a hybrid OS server. Most social media startups do not require having server and server space to operate, but since the technology of one startup requires improving multi-OS/agnostic server migration and testing, will VC funding be a necessary route?
Thank you for the question. Of the many reasons to raise capital – Capex is certainly a valid one. When people come to us for venture capital (equity capital in general), in most instances, capital equipment is certainly one of the reasons – along with working capital and general operating expenses. While what you do ultimately depends a ton on what your business is, what stage you are in, how much the company cash flows, etc - if you are a profitable enterprise, generating cash, it may be just easier and ultimately cheaper for you to raise traditional bank debt to fund the capex. If your goal is growth capital to help propel you to the next level, then perhaps a combination of debt and equity is preferable. There are pros and cons to either capital structure and you are well served to speak with experts in both fields who have clear visibility into your business and then make a decision.
