In the later stage of startup growth, the company has accumulated enough scale and track record to access to sell assets and/or utilize securitization markets. Lender purchases assets via forward flow and/or acts as a public or private securitization buyer. In this stage, funding opportunities extend significantly, thus working with a variety of lenders for diverse funding sources and better pricing should be prioritized.
What Matters?
Diversity of Funding Sources: control your own destiny. Through diversity of funding providers, ensure no single provider can create an existential risk for the company.
Large Funding Sources: substantial cost savings (ie. alpha) can be found when larger sources of capital are tapped.
Durability: hiring the best individuals possible to run capital markets internally will pay dividends for ever. Those who can anticipate problems before they arise, think strategically and act proactively will be worth their weight in gold.
What to Avoid
Being Underprepared: forcing the transition from stable asset generation to scalability. Failures in capital markets can be very public and hurt perceptions of the Company.
Only Using Short Term Financing: short term financing and long term lending can kill even the best businesses if financing markets dry up quickly. Hyper optimization for price and only using short duration funding sources can create existential risk. Finding the acceptable medium is critical.
