For many founders, growth brings an unexpected dilemma: demand is rising, retailers want faster delivery, and suppliers require deposits long before the customer ever pays. Cash gets tied up in production, and suddenly every big opportunity comes with a difficult choice – slow down, or give up equity to finance stock.
The hidden cost of using equity for inventory
One founder we spoke to recently put it like this: “I’ll raise investment to grow the business – but not to pay for inventory. That’s essentially giving away equity forever, if we want to keep on growing.”
In our talks with founders, we hear this type of concern often. Investors often offer a line of credit, but it comes bundled inside an equity deal. What starts as a short-term working capital need becomes a long-term ownership trade-off. And as founders have seen on shows like Dragons’ Den, the pattern repeats itself: equity exchanged, not for strategic support, but just to bridge the cash flow gap between ordering and selling stock. In the end, using equity to fund invoices might end up being the most expensive money you ever raise. But there's a better way.
The space between buying and selling
Flexible inventory financing allows brands to fund supplier payments without dilution, without committing to a rigid facility, and without risking long-term ownership. Instead of handing over control, companies keep equity for what it’s meant for – growth, brand building, team expansion – while solving the practical day-to-day reality of long lead times and unpredictable cash flow.
As the founder put it, “I want the credit to be separate from the investment.” And ambitious product companies feel exactly the same.
Ask yourself – what's the capital really for?
Modern growth shouldn’t require giving away a piece of your company just to pay for your next purchase order. Before making a decision on what type of capital you need, consider the cost.
Are you looking to get investors in at this stage? Maybe. If you value their connections, competencies and expert opinions. But if you need working capital to finance your growth – fund stock, smooth cash flow, and advance your customer invoices? No need to give up control for that. Understanding the difference – and exploring financing tools designed specifically for the operational side of the business – can help ensure that the capital you bring in is doing the job you intended it to do. If you want to discuss, get in touch here.
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