"Should we take the loan or sell the shares?" — priced properly. Model the same raise both ways: the equity route's dilution cost at exit vs the debt route's interest + fees + warrant coverage, with the breakeven exit valuation where the two cost the same. Check the runway math first in Burn & Runway, and see the round's dilution mechanics in the Cap Table Modeler. Pure client-side math.
Debt is cheap when the exit is big (dilution given up compounds with the valuation); equity is "cheap" when the exit disappoints (the investor shares the downside, the lender doesn't). The orange row marks the breakeven.
Equity route — selling raise / (pre-money + raise) of the company. Cost at exit = ownership sold × exit valuation − raise: the value of the shares you gave up, net of the cash you got. (Single round, no anti-dilution, ignores later-round dilution of the new investor — a conservative simplification that favors equity.)
Debt route — cost = interest + fees + warrant cost. Interest is simple interest-only over the term (loan × rate × min(term, years)) with a bullet repayment. Fees = loan × fee% at close. Warrant cost at exit = coverage% × loan / (pre + raise) × exit valuation − coverage% × loan — the warrants convert into ownership priced at today's round, so their cost is the same shape as equity dilution, just ~10× smaller.
Breakeven exit valuation — solving equity cost = debt cost for the exit value. Below it, equity was the cheaper money; above it, debt was. The sensitivity table brackets it in orange.
What's intentionally omitted — amortizing repayment schedules, PIK toggles, MAC covenants and material-adverse clauses (often the real cost of venture debt), final-payment fees, prepayment penalties, and the refinancing/default scenario where debt accelerates a wind-down. Venture debt's tail risk is covenant-driven, not interest-driven — read the covenant package before the pricing.
Educational financial-modeling tool — not investment advice. Venture-debt term sheets vary widely (covenants, final payments, warrants struck on prior rounds); model your actual terms before deciding. All math runs in your browser; no inputs are sent to a server.