While Rallyday does not believe in using much if any debt at the close of a new partnership, debt is neither good nor bad. It’s neutral — until you decide how to use it.
For many founders, debt can feel like a straight jacket. A shackle. A sign that something went wrong. But in reality, well-structured debt can be a powerful tool for building momentum.
The key is understanding what type of problem you’re solving.
If you’re using debt to buy time, it can create pressure and distraction.
If you’re using debt to build momentum, it can create acceleration and leverage.
When Rallyday helps founders evaluate debt, we look at three questions:
- What’s the purpose? Growth capital? Recap? M&A? Clarity here prevents misuse.
- Is the operating system ready? Without clean data and predictable cash flow, debt creates fragility.
- What’s the real cost? Not just interest — but stress, focus, and flexibility.
Debt can help founders take chips off the table, fund acquisitions, or invest in capacity. But only if the foundation is solid. That’s why professionalization — tightening reporting, upgrading systems, and expanding leadership — often comes before leverage.
Used intentionally, debt doesn’t trap founders. It frees them to scale with more equity value creation potential.
Takeaway: Debt amplifies what already exists — discipline or dysfunction. Get the system right first, then let capital follow.