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Can startup issue bonds?
Startups can technically issue bonds to raise capital, just as larger corporations do. However, it’s less common because startups often lack the established track record and creditworthiness bond investors typically seek. Instead, startups usually rely on equity financing, venture capital, or loans. If a startup were to issue bonds, the interest rates would likely be higher to compensate investors for the increased risk. Startups must weigh the costs and benefits of each financing method to determine the best fit for their business needs.
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Maturity and Stability: Startups typically do not have the stability or creditworthiness to issue traditional corporate bonds. Investors in bonds look for a stable source of income and assurance of repayment, which is often lacking in the early stages of a startup.
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