Costella Kirsch

Equity fundraising in 2026 looks great on paper. Record dollars deployed. Headline-grabbing rounds. But zoom in and the picture changes fast. Deal volume is near a 10-year low. Rounds are taking 2x longer than they did three years ago. And if your company isn’t an AI infrastructure play absorbing nine-figure checks, you’re operating in a very different market than the headlines suggest. That’s exactly where venture debt becomes a strategic tool — not a consolation prize. The strongest borrowers we’re seeing at Costella Kirsch aren’t coming to us out of desperation. They’re coming to us strategically — extending runway without repricing a round, preserving ownership at a critical inflection point, and keeping optionality open while they wait for the right equity moment. The founders who navigate this environment best aren’t choosing between debt and equity. They’re thinking carefully about when each one makes sense. If you’re a founder or CFO mapping out your next 18 months of runway, it’s worth having that conversation before you need it.

Most founders ask their lenders: "What are your terms?" The question I wish more founders asked: "Show me the worst quarter you underwrote in the last decade and tell me how it played out for the founder." A lender's track record in a great market is uninformative. A lender's behavior in a bad quarter is everything. Costella Kirsch has been through 1989, 2001, 2008, 2020 — and a handful of one-off bad quarters in between. Several of our portfolio companies in 2020 hit months where many other lenders in the category were issuing notices of default. The thing I'm proudest of is what didn't happen here: We didn't accelerate. We didn't pull capital. We didn't force a fire-sale exit. We modified terms when modifications made sense, and held our ground when they didn't. None of that shows up on a term sheet. It shows up in the references. Ask for them, and call them — from any lender, not just us. Especially the ones who haven't lived through a hard quarter yet.

When I was running Motherly, I thought "founder-friendly" was a vibe. I thought it meant the partner answered your texts on Sundays, came to your offsite, took the call when you were having a hard quarter. I was half right. Founder-friendly is also a structure. It shows up in the term sheet, not the relationship. — No personal guarantee. — No board seat. — No financial covenants you can trip in a bad month. — No MAC (material adverse change) clause that lets the lender pull the loan if your numbers wobble. — Senior secured, sure, but with a partner who cares about your enterprise value as much as the loan. A vibe is good. A vibe in writing is better. If you're evaluating capital right now, the term sheet is the relationship. Read it like one.

In January 2020, the second close of our Series A came in oversubscribed. It was supposed to feel like a clean win. A week later, the final post-money cap table came back from counsel — the first version that wasn't a moving target. The angel convertible had converted. The '19 SAFE — which had bridged us between the seed and the A — had converted. Both A closes were in. I read it twice. The valuation was great. The investors were great, top-tier VCs. The number next to my name had dropped from a number that felt like a company I built into a number that felt like a company I worked for. Not because anyone did anything wrong. Because I'd said yes to dilution every time I'd needed cash, without ever asking what else was on the menu. That cap table changed how I thought about every subsequent dollar. Six years later I'm on the other side of the table at Costella Kirsch, and every founder conversation I have includes the question I wish someone had asked me: "Have you considered the version of this that doesn't dilute you?" If you're heads-down on your next round, an honest exercise: pull out a yellow legal pad. Work the cap table forward two more rounds at the dilution you're planning for this one. Look at the number at the bottom. Then ask whether there's a version that gets you to the same revenue with less of you given away.

The most expensive thing in a venture debt deal usually isn't the interest rate. I learned that the hard way when I was running Motherly. We had a debt facility with SVB. Like most venture debt of the era, it was structured in tranches — we'd drawn the first, and the second was sitting there, contingent on milestones and, implicitly, on us continuing to raise equity to support growth. During COVID, we made a deliberate decision not to do another priced round. Instead, we worked to pivot the business toward breakeven and prove out a more disciplined model. It was the right call for the business. It was the kind of decision founders are supposed to make. SVB wouldn't release the second tranche. Our issue? The structure of the facility assumed we'd keep raising equity — and when we chose discipline instead, the underwriting model behind our debt no longer worked. That was the moment I understood something about venture debt that almost no one talks about: most of it is priced and structured on the quiet assumption that you'll keep raising priced rounds forever. The minute you decide to stop, the lender's risk model breaks. And you find out what "partner" actually means. We moved our debt to Costella Kirsch shortly after. No financial covenants. No requirement for a recent equity round. No board seat. No veto. They underwrote the business as a business — not as a forward bet on the next round. The right capital partner behaves like an operator with a check, not a creditor with a checklist. If you're evaluating a term sheet right now — especially if you're weighing another round against pivoting to discipline — the question I'd push you to ask isn't "what does this cost?" It's "does this structure quietly assume I'll keep diluting forever — and what happens if I don't?"

This week I'm spending time with three founders doing $5M to $20M in revenue. Different industries. Same question: "What's the smartest way to fund the next 18 months without doing another priced round?" That's the conversation I get to have now, every day. And it's the conversation I wish someone had been having with me when I was running Motherly. Costella Kirsch launched a new fund this January, and we're actively writing checks — $500K to $10M+ — to founders building real businesses in SaaS, AI, consumer brands, and beyond. This is our eighth fund since 1986. And — this is the part that doesn't get talked about enough in our category — we don't require a recent equity round. We back bootstrapped companies. Angel-backed companies. Founders growing real businesses who aren't ready (or willing) to do another priced round. That lane didn't have a name when I was raising for Motherly. I wish it had. A few of the lessons I learned the hard way and now get to share: — Equity is not always the fastest path to growth. — The cheapest dollar is the one that doesn't dilute you. — The right lender behaves like an operator, not a creditor. I'll be writing here regularly about capital structure from the perspective of a founder who lived it and now sits on the other side. Specific. Honest. Sometimes uncomfortable. Mostly useful. If you're a founder doing $100K+ in monthly gross profit, growing, and wondering if there's something between bootstrapping and another priced round — let's talk. And if you know that founder — please send this their way. I'm energized by this work in a way I hadn't expected. Excited to be back here, and excited about what's ahead.