MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

Never Mix These Two When Raising Capital…

6 Dec 2025 · 1 min

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Mark Kohler explains three ways to raise capital: borrowing, partnering, or issuing securities. He warns against mixing debt and equity through "participating notes" that promise both interest and upside, comparing it to driving in two lanes at once. Hybrid arrangements create legal problems for the issuer.

Chapters

Either you borrow the money, you partner with someone that's got money or you raise the money through an SEC approved manner. And so you're going to a security route, you're going to partner, you're going to borrow or lend. That's it. And they come with pros and cons. Now let's throw this out too right out of the gate. It cannot work when you try to blend them and I know you think it's easier to raise money when you blend they'll borrow. And the partner concept and the term that's out there on the streets is that this participating note you're trying to raise money and you say hey I'll give you X percent on your money and interest rate and then when we sell I'll give you part of the deal. Okay, you just blended two lanes. Can't drive in two lanes. You're going to get a ticket. Can't do that, you're going to be a problem.