Capital Structure 2027: A Founder Forward Plan

Private credit AUM crossed 1.7 trilliondollars in H1 2026, up from 1.5 trillion the year prior (PitchBook, H1 2026Private Credit). The founders planning 2027 raises around equity alone areleaving the cheaper capital untouched.

Therate backdrop founders are pricing off

The FederalReserve H.4.1 balance sheet held at 6.7 trillion dollars through Q2 2026, withreserve balances stabilizing after the 2024 to 2025 runoff. SOFR settled in the4.10 to 4.35 percent range across the first half of 2026, and the S&P LCDUS Loan Comparable index tracked new-issue institutional loan spreads at SOFRplus 375 to 425 basis points for single-B credits (S&P LCD, Q2 2026).

That backdropmatters for one specific reason. All-in cost of unitranche debt for agrowth-stage borrower with 15 million dollars of ARR and contracted revenue nowclears at roughly 10.5 to 12.5 percent all-in. Priced against equity dilutionat 4.5x ARR, that debt is the cheapest capital on the table for founders whocan service it. Most 2027 plans we see do not model this line.

Whatwe see in the term sheets crossing our desk

Across ouradvisory work in 2025 and 2026, the pattern in growth-stage capital structureconversations is consistent. Founders arrive with an equity-only plan. When welay the debt-equity blend beside it, using PitchBook H1 2026 private creditdeal terms as the anchor (median leverage 4.5x EBITDA for software credits,3.8x for services, 5.2x for healthcare with contracted revenue), the blendedcost of capital drops 180 to 240 basis points against a straight equity raiseat current growth-equity multiples.

The founders whotook the blend cleared their rounds faster. That is not a claim about Yannecloses. That is a claim about what the public market data on private creditdeal terms shows when you overlay it on growth-equity comps from the sameperiod (PitchBook, H1 2026).

TheDSR math founders should run before Q4

The gatingquestion is not whether debt is available. Bloomberg DCM tracked 218 billiondollars in US private credit direct originations in H1 2026, roughly flatagainst H2 2025 but concentrated in software, healthcare services, andspecialty finance (Bloomberg DCM, July 2026). Capital is there for credits thatclear underwriting.

The gatingquestion is debt service ratio. A DSR of 1.3x on projected free cash flowagainst forward interest expense is the working floor for direct lenders in2026. Below 1.3x, the round goes back to equity. At 1.5x and above, theborrower has pricing leverage. Founders planning 2027 raises should run thisnumber in July 2026, not December, because the fix (typically a revenue mixshift toward contracted recurring, or a cost restructuring) takes two quartersto show up in the trailing twelve month figures a lender will underwrite.

Wherethe 2027 plan usually breaks

Three failurepatterns show up repeatedly. First, the plan assumes 2024 to 2025 equitymultiples will hold, and prices the equity slug at 6 to 8x ARR when theclosed-deal median in software growth rounds ran 4.5x ARR through Q2 2026(PitchBook, H1 2026). Second, the plan treats debt as a fallback for a failedequity raise rather than a component of the base case, which means the debtconversation starts six months late. Third, the plan ignores the covenantpackage, and the founder discovers in diligence that the covenants restrict theexact operational flexibility the equity raise was meant to fund.

Yanne Capital isan independent boutique investment bank advising growth-stage companies onequity, debt, and M&A transactions across 26 sectors, with 240+ closeddeals and relationships with 3,500+ institutional investors globally. We areyour trusted filter between noise and signal. The capital structure work we dosits earliest in the founder timeline because the decisions made in the planphase determine what is available in the process phase.

Theforward plan

A founderplanning a 2027 capital event should have three numbers on one page by October2026. The projected DSR at Q4 2026 close and Q2 2027 close. The blended cost ofcapital under three scenarios (100 percent equity, 60/40 equity/debt, 40/60equity/debt), priced against current PitchBook and S&P LCD comps. And thecovenant sensitivity, meaning the operational moves the covenants would blockif the debt slug were drawn.

Founders whobring those three numbers to the first investor conversation run a differentprocess than founders who bring an equity ask. The lender sees a borrower whohas done the credit work. The equity investor sees a founder who is notdesperate. Both conversations move faster.

If you areplanning a 2027 capital event and want the DSR and blended-cost-of-capital workdone against your actual numbers, reach out at contact@yannecapital.com