Annveshan's Presentation on

Bank Funding vs. Equity Funding for

Sangeetha Mobiles
Bank Loan
● Debt Financing: A bank loan involves borrowing money that must be repaid with
interest over time, without giving up ownership.
● Interest Payments: Regular interest and principal payments can strain cash flow.
● Collateral: Banks may require assets or personal guarantees, posing risks.
● Control: Full company control is retained; banks focus on repayment.
● Predictable Costs: Fixed interest rates simplify financial planning.
● Tax Benefits: Interest on debt is deductible.
● Legacy Business: Suited for lifestyle businesses focused on generational legacies.
Private Equity Funding
● Equity Financing: Private equity involves selling ownership stakes,
granting investors a say in management.
● No Repayment Obligations: No regular interest/principal payments;
investors share profits/losses.
● Expertise and Networks: PE investors offer valuable industry
expertise and networks.
● Corporate Governance: Formal boards often established with PE
investments.
● Accelerated Growth: PE seeks exits in 810 years, pressuring growth.
● Benchmark Valuation: PE rounds set valuation benchmarks for IPOs.
● Path to IPO: PE investors enhance reach and valuation for IPO.
● Personal Wealth: Primary and small secondary offerings unlock
wealth for passive income/diversification.
● Long Term Capital: PE investors provide capital for growth.
● Dilution of Ownership: Ownership and decision making are shared.
● Higher Risk/Reward: PE entails risk and complex deal structures.
 Considerations

Financial Situation: Strong cash flow

Control vs. Expertise: Balance
and collateral favor bank loans, while
control and experienced partners. 01
high-growth phases may benefit from
PE.

05
02
Growth Pace: PE suits high-
acceleration scenarios where bank
funding falls short.

Risk Tolerance: Assess comfort with 04

sharing ownership and control. 03
Long-Term Goals: PE supports
growth; bank loans are shorter-term.
Additional Factors
● Bank Loan for Control: Established
companies find bank loans favorable for
retaining control.
● Bank Loan Advancements: Benefits
include debt consolidation, asset
acquisition, credit building, tax benefits,
and leveraging opportunities.
● Asset Consolidation: Bankfunded
companies may consider consolidating
assets under a family trust.
Companies with High Profits
and Cash Surpluses That
Didn't Pursue Equity Funding
01 Nikhil Kamath's View: No need for external funds; IPO not
preferred due to unpredictable stock market performance.

02 Zerodha: Self-funded with a family board; profitable and debt-

free.
Companies with High
Profits and Cash Surpluses
That Chose Equity Funding

● SpaceX: Raised equity funding before

considering an IPO; focused on space
exploration.
● Airbnb: Raised equity funding despite
profitability; supported global expansion.
● Stripe: Raised equity funding for fintech
expansion.
● Palantir Technologies: Raised equity funding
for data analytics.
Reasons for Equity Funding
● Funding growth and expansion.
● Achieving ambitious goals.
● Advancing research and development.
● Accelerating global expansion and marketing.
● Gaining strategic guidance and networks.
● Paving the path to IPO.
In summary
● The choice between bank funding and
equity funding depends on various
factors, including financial situation,
growth goals, control preferences, and
risk tolerance.
● Companies with high profits and cash
surpluses may opt for equity funding to
support ambitious growth plans, gain
expertise, and pave the way for potential
IPOs, while others may favor bank loans
to maintain control and leverage
financial advantages.
Contact us

Vivek DS. Vikram Udupi​

Partner Partner ​
09845378991 097387 79117
vivek@sureshandco.com vikram.u@sureshandco.com​

Bengaluru
#43/61 | Surveyors Street
| Basavanagudi | Bangalore-560 004
Ph: +91-80-2660 9560/ 2662 3610/11

Chennai
Flat no:1A, Divya Ramaneeyam Apartments ​
20/39 | 4th Main Road| R.A.Puram ​
Chennai - 600 028 ​

Delhi
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New Delhi 110015

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