A few years ago, the FundOnion team moved into a bigger office.

Our accountant pulled me aside and pointed out, that the cost ratio was higher than it probably should be. 

He wasn't wrong. On paper it looked extravagant - more space, more overhead, more commitment than we strictly needed at the time.

But I went ahead anyway (I’m stubborn like that). 

Because sometimes the thing that looks sketchy in the short term is exactly the thing that changes what you can do next. 

> More space meant more people. 

> More people meant more cash flow. 

> More cash flow meant options we simply didn't have before.

That decision reduced our long-term risk - even if it didn't feel that way at the time. Now my employees are fighting over chairs. Might be time to get one of those desk-booking apps.

The point is this: the financial decisions that feel the scariest are often the ones that, in hindsight, made the most sense. And the ones that look responsible - staying small, staying cautious, never borrowing - often just limit you in ways you don't notice until it's too late.

General Motors is the extreme version of this lesson. Played out with $24B of taxpayer money and a balance sheet that still isn't settled.

GM was rescued once. Now it's spending $136B to make sure that never happens again.

1/ In 2009, GM took a $24B government bailout, handed over 61% of the company and watched its CEO walk out the door. The cost of survival was total loss of control

2/ In 2025, GM raised $2B - but this time through debt, not equity. Different tool, different risk, same underlying pressure

3/  GM now carries $131.31B in total debt, funding an EV transition while simultaneously servicing the legacy costs of an older business model. The maths only works if demand materialises

4/ The real lesson isn't about GM specifically, but knowing when debt is a strategic tool and when it becomes the thing that finally breaks you

Picture the most American thing you can think of. A big V8 engine, a pickup truck the size of a small house, a motorway with six lanes going in each direction. Somewhere behind all of that, for most of the 20th century, was General Motors.

GM was founded in 1908 - the same year the Ford Model T rolled out, which gives you a sense of the era. They went on to become the biggest car company on the planet. Chevrolet, Cadillac, Buick, Pontiac - all GM brands. 

At their peak in the 1950s, one in every two cars sold in America had a GM badge on it. They were, in many ways, selling the American dream - the idea that if you worked hard enough, you could afford a shiny new Chevrolet on your driveway.

For decades, that felt permanent. But by the late 1990s the cracks were showing: rising pension costs, factories that hadn't meaningfully changed since the Thatcher era and Japanese competitors nicking market share with cars that were cheaper and, frankly, more reliable. 

GM kept doing what GM had always done: building big, petrol-guzzling cars for the American market and assuming the American market would always want them.

And not "bad quarter, blame the macro" trouble. More like "we might not exist in six weeks" trouble.

Sales had collapsed. Credit markets had frozen. The cash was disappearing fast - and nobody at the top was particularly keen to say that out loud. If you've ever sat in a boardroom where everyone's pretending everything's fine, you'll recognise it immediately.

So the U.S. government stepped in to save the company with $49.5B. The reason? GM employed too many people, supplied too many businesses and funded too many pension pots to be allowed to disappear.

The price of that rescue, though, was 61% of the company. Shareholders got wiped out. The CEO got the boot. GM - the company that had spent a century telling everyone else how it was going to be - handed over the keys just to survive.

It worked. GM restructured, floated again in 2010 and started rebuilding. By any measure, the bailout did its job.

There's just one thing nobody likes to admit: when a company believes it's too big to fail, it starts behaving accordingly. The consequences of bad decisions get outsourced to someone else. Meanwhile, the competitors who'd actually managed their money carefully sat and watched their reckless rival get a government-funded reset.

Economics has a word for this. It's called moral hazard. And it's considerably easier to spot in hindsight.

This time through debt rather than a government handout, which is at least a step in the right direction. Debt means shareholders don't get diluted. Management keeps control. Nobody has to hand 61% of anything to anyone. On paper, smarter.

Now for the bit that'll make you do a double take.

GM currently sits on $131.31B in total debt. Total obligations come in at $214.2B. And the entire company - everything, all of it - is now worth about $70.37B on the market.

So their debt alone is nearly twice what the whole business is worth. Just let that sit for a second.

The new $2B is going towards EVs, paying off older debt and battery factories. Repayments don't kick in properly until 2028, 2030 and 2035 - so at least they've bought themselves some breathing room.

Here's the situation GM is actually in: they're paying to run two completely different businesses at the same time.

On one side, the old GM. Internal combustion engines, century-old manufacturing infrastructure, pension obligations stretching back decades. On the other, the new GM they're trying to build - electric vehicles, battery factories, the whole thing. Two sets of costs. One balance sheet footing the bill for both.

For this to work, a few things need to go right at once. EV demand has to grow at the prices GM is expecting. The manufacturing transition has to go smoothly. And it'd really help if interest rates were falling - though given everything going on geopolitically right now, that's not looking likely any time soon.

If it all goes to plan, GM emerges leaner, more modern, with a debt load that looks manageable against what the business is earning. If it doesn't, the debt stops being the solution and starts being the problem.

GM's balance sheet is, hopefully, not something you can personally relate to. Their mistakes, on the other hand, are very relatable indeed.

Debt has a bad reputation. And not without reason - it's the thing that maxed out the credit card at university, the reason your mate's startup went under, the word that appears in bold on letters you'd rather not open. 

But there's a meaningful difference between bad debt and good debt, and conflating the two is an expensive habit. The fear is understandable. Acting on it, every time, without question, is where it starts to cost you. 

GM didn't lose control of their company because they borrowed too much. They lost it because they avoided the right kind of borrowing for too long - and by the time they had no choice, the only option left was handing over the keys.

Can you still make the payments if things go wrong? Not if everything goes to plan - if things actually get difficult. Revenue drops, margins compress, something unexpected hits.

If yes, borrow. If no, rethink before you sign.

That logic works in reverse too. If your cash flows are stable and predictable, avoiding debt isn't cautious - it's just leaving cheap capital on the table. But if revenues are unpredictable and growth is still ahead of you, equity makes more sense. An equity investor can't force you into insolvency the way a lender can.

The mistake isn't always avoiding debt. Sometimes it's reaching for it at exactly the wrong moment.

Which is GM's real problem. Not that they borrowed - but that the assumptions behind it leave almost no room for error.

Monthly, quarterly, interest-only with a balloon payment at the end - every structure assumes something different about when the money will actually be there. 

A short interest-only period at the start - even just six months - can make a real difference. It gives you time to deploy the capital, generate cash flow and start making full repayments from a stronger position. Worth negotiating for if you can get it, and most lenders can work with it.

Get the timing wrong though, and you breach covenants. Breach covenants and you're in default. And unlike most equity investors, a lender in default has immediate, real power to act. That's the bit that tends to surprise people - and the bit worth understanding before you need to.

Giving away equity feels low-risk because there are no monthly repayments. But you're permanently handing over a slice of everything you build from that point forward. 

As we’ve covered, GM gave up 61% of their company in 2009 and spent the next decade buying it back. The founders who dilute early, often and without exhausting their debt options first, tend to look back on those decisions as the expensive ones.

The office move I mentioned at the start - that was debt-funded. It felt a bit scary. The cost ratio was higher than it should have been. That said, it gave us the space to grow, hire and generate more cash flow than we could have managed from our previous setup. 

Debt deployed into decisions that structurally improve the business is how well-run businesses grow without giving away ownership every time they need capital.

Who knows. The 2009 bailout saved the company. Whether the current strategy rebuilds it properly depends almost entirely on how the EV market develops over the next decade, and whether the assumptions baked into $136B of borrowing actually hold.

What's clear is that they learned at least one thing from 2009: handing over control is expensive. Debt, for all its risks, keeps the business in the hands of the people running it. The rest is still being written.

And if you're sitting on a business with decent revenues and still funding everything from cash flow because debt makes you nervous - it's worth asking whether that nervousness is actually protecting you, or just costing you. 

If you can relate, reply to this email or drop me a line at [email protected]. 

Tell me a bit about the business - revenue, what you're trying to do - and I'll tell you honestly what debt options are likely to be available to you.

Till next time,

James