Founder focus: Fineas Tatar of Viva explains how founders should think about line of credit

Miguel Fernandez
Miguel Fernandez
Co-founder & CEO
Posted on
October 13, 2022
min read
Founder focus: Fineas Tatar of Viva explains how founders should think about line of credit

One of our customers, Fineas Tatar, co-CEO of Viva, recently mapped out a scenario that could be useful for any founder looking to drive their company’s success right now.

Viva is a leading productivity solution that combines remote EA talent + technology + techniques to help startup executives become more productive. They work with executive teams at fast-growing startups like Notion, Hasura,

Capchase has been working with Fineas and Viva to provide them with the growth capital they need to enter their next phase of growth. And Fineas recently created one of the clearest explainers I’ve seen on line of credit. It’s a topic many founders don’t have the right level of clarity or education on, to their detriment. Understanding how to use a line of credit to your advantage can be a game-changer for your business. So I want to share his explanation here, so as many founders as possible can benefit from Fineas’ outline of the insurance that a Capchase line of credit represents.

In his words:

If you have $X,000,000+ in the bank and 12+ months of runway, you may not be looking for a line of credit.

But the best time to go looking for money is when you don’t need it.

You avoid desperation during the months-long approval process often involved with loans.

You have the ability to walk away from the wrong partners.

You can negotiate better rates.

A few CEOs I've talked to haven't explored a line of credit (LOC) option.

Non-dilutive funding, like a line of credit, is a lot more affordable than many people think.

For example, say you were looking for $1M line of credit and your minimum draw to keep the agreement alive is say 20% (it can be lower or sometimes non-existent).

You'd effectively have to withdraw $200K to have access to the full $1M.

Say your interest is ~10% (simple interest in this case).

$20K is the interest for the year.

On a monthly basis, that comes out to ~$1.6k a month.

That means you are only paying 1.6k a month in order to have access to the entire line of credit.

That is powerful.

Especially in an economy where it is impossible to predict what the next 12, 24 or 36 months will bring.

From a defensive mindset, you can ensure stability for your employees.

From an offensive mindset, you can get creative about your growth rate.

Hire additional staff.

Take a bet on that risky go to market experiment, etc.

I want to give a shoutout to our partners over at Capchase, the CEO Miguel Fernandez Larrea and Head of Sales Jamie Maynard for standing with us as we take our growth to the next level with a loan tailored to extending our runway.

Their professionalism and ease of service is unmatched - highly recommend you check them out if you're looking for non dilutive capital.

In a world in which speed is everything, non dilutive funding is the best way (and one of the fastest ways) to stay one step ahead of the game.

In the end, choosing your ideal source of capital is always a complex decision making process. But having the opportunity to leverage your future cash flow as growth capital - and growth capital that will scale as you scale, without worrying about the effects of dilution - is certainly a great option for most founders.

I’ll leave you with this thought.

If you have 12 months+ of runway, and sales and marketing spend represents X% of your costs, how much more could you achieve with X% more runway?

The founders we partner with tend to find that they can achieve a great deal - even unlocking growth plans they hadn’t thought would be possible for them on their current roadmap. And the amount they pay to get this X% more runway is minimal compared to the impact and gains they see.

By using flexible, non-dilutive growth capital paid monthly or quarterly to finance their sales and marketing spend - which brings in predictable recurring revenue to finance this growth capital - founders have saved their existing funds to preserve their runway and set key growth plans in motion.

Maintain independence and raise money your way
Get financed