If your funded startup just closed a funding round, should you really finance your lab equipment?

To many outsiders, the answer seems obvious: if you’ve got the cash, why not just buy the tools you need? But for experienced founders and operators – especially those leading early-stage scientific ventures – the answer is more nuanced. Smart capital allocation is often the difference between momentum and stagnation, between a lean, high-functioning lab and one burdened by up-front costs that erode runway and flexibility.

For funded startups, financing lab equipment isn’t about a lack of resources. It’s about control.

This article explores why even well-capitalized founders choose to finance core lab infrastructure, and how that decision can extend runway, minimize dilution, and create more resilient operating models.

The Capital Efficiency Imperative

Founders today are under more pressure than ever to be disciplined stewards of capital. Investors are prioritizing efficiency metrics, and downstream funders are increasingly asking: how much traction did you achieve with the last round?

According to Carta’s 2024 State of Startup Compensation report, data shows headcount and payroll trending down – signaling startups are recalibrating burn. With leaner teams being the norm, runway has become even more precious. In this environment, spending $500,000 or more upfront on lab instrumentation can be a misstep of strategy.
Well-run companies preserve capital for the high-leverage areas of the business:

• Hiring talent: Building a strong technical and commercial team
• Developing IP: Advancing the core technology or science
• Go-to-market execution: Validating demand and accelerating adoption

Financing lab equipment is a way to shift large capital expenses into manageable monthly costs, allowing more capital to be deployed where it can drive exponential returns.

The Real Cost of Buying with Equity for Funded Startups

Every dollar spent from a venture-backed bank account carries a hidden cost: equity.

When you use investor capital to buy fixed assets, you’re trading long-term ownership for short-term infrastructure. That’s fine when infrastructure is the bottleneck to growth. But in common practice, it isn’t.

According to Silicon Valley Bank’s State of the Markets 2023 Report, as venture funding tightened in 2022, startups began managing runway by reducing burn and focusing on profitability and efficiency.

Here’s a simple example:

• Imagine you raise $3M at a $12M post-money valuation
• You spend $600K on equipment
• That $600K represents 5% of your company – forever

Leasing or financing the same equipment over three years might cost a total of $720K, but it allows you to preserve that 5% stake. For many funded startups, that trade-off is well worth it.

Strategic Flexibility in a Changing Market

Financing also introduces a kind of strategic flexibility that outright purchases can’t. As your startup evolves, so do your needs:

• You may need to scale capacity faster than expected
• Certain assets may become obsolete as workflows change
• Investor priorities may shift (e.g., toward clinical, regulatory, or commercial milestones)

With financed equipment, you’re not locked into a sunk cost. You can:

• Upgrade or swap out systems as needs evolve
• Return or buy out assets depending on outcomes
• Align payments with revenue milestones or reimbursements

This flexibility is particularly important for labs developing novel technologies, where uncertainty is a given and capital efficiency is critical.

Build vs. Buy vs. Lease: Rethinking CapEx in the Lab

Founders at technical startups are increasingly rethinking the CapEx mindset. The old model of “raise money, build out a lab, own the equipment” works best in stable environments with long timelines.

Today’s model is different:

• Labs need to launch fast
• Teams are distributed or remote
• Burn rates are under scrutiny

As a result, more funded startups are:

• Leasing lab space in co-working or flex facilities
• Outsourcing manufacturing or testing during early phases
• Financing instrumentation to conserve cash for R&D

The idea isn’t to avoid ownership forever. It’s to delay it until it makes strategic sense.

What a Funded Should Look for in a Financing Partner

If you’re considering financing equipment after a funding round, choose partners who understand your stage, goals, and scientific context. The right lender will:

• Move quickly to help you capitalize on your momentum
• Understand scientific workflows (not just financial metrics)
• Offer flexible terms, including early buyouts or milestone-based structures
• Provide visibility into portfolio performance, payments, and upgrade options
• Support scaling, including future lab expansions or additional sites

Self-funded lenders can be especially helpful here. Because they’re not reliant on third-party approvals, they can underwrite more strategically – and follow through without last-minute surprises.

Common Objections (and Why They’re Outdated)

“But we have the cash.”
Yes, and you’ll need it. Funded startups who finance strategically aren’t avoiding cost, they’re prioritizing where cost should live. Your goal is to turn fixed cost into variable expense until traction proves durable.

“Isn’t leasing more expensive?”
On paper, yes. Over time, financed equipment often costs more than a cash purchase. But that difference is almost always smaller than the long-term cost of unnecessary dilution.

“Will this hurt our balance sheet?”
Not necessarily. Operating leases can preserve balance sheet optics, and even capital leases can be structured to match your strategic goals. Plus, having an established financing relationship makes future procurement cycles easier.

Financing as a Strategic Tool for Funded Startups – Not a Last Resort

When used well, financing isn’t about scraping by. It’s about building the funded startup on your terms.

It means:

• Delaying dilution
• Keeping headcount and product roadmaps funded
• Preserving optionality when market conditions change

Most importantly, it reflects a founder mindset focused on value creation, not just asset acquisition.

So, if your funded startup is flush from a recent round, don’t assume cash purchases are the smartest path forward. Your investors gave you capital to drive innovation, team building, and market traction. Not to tie up fixed assets.

Use it accordingly.

Bold View Capital helps funded startups deploy capital efficiently by financing equipment aligned to growth – not just spend. Preserve runway. Delay dilution. Stay flexible. Contact us to learn more.