It is often cheaper than selling equity, but more expensive than bank loans. They typically cost 15% to 30% IRR compared to <10% for bank loans and 50%+ for VC. However, profit sharing can be as expensive as traditional equity if the founder chooses to raise follow-on VC funding, triggering the conversion of any outstanding debt to equity. If founders can get access to a cheaper fixed-rate bank loan and are willing to secure the loan with personal guarantees and collateral, then they should take it.