Journal of
Italian
Banking
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year 100
 

Archive » March 2021 » Start-up bankability

Start-up bankability

Roberto Moro Visconti
March 2021 - n. 3
Keywords: Patrimonio netto monetario, market traction, cash runway, bridge financing, private equity, venture capital
Jel codes: G21, G24, M13

In the early years of their life, start-ups are typically debt-free, being unable to generate positive cash flows or grant adequate guarantees. The raised capital is attributable to equity, which represents the cash reservoir that allows startups to survive till a surplus of liquidity accrues. When a start-up reaches its maturity and financial break-even, thanks also to the bridging finance provided by specialized intermediaries (venture capital, private equity, subsidized finance) it can begin to get into debt. This represents an important milestone, reserved for scale-ups that survive the Darwinian selection, crossing the «Death Valley» (which involves a cash and equity burnout).

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