Firstly, to say there's no debt, monetary or otherwise, to someone who believed in your company enough to hand over their own money (or money in their control) to back you is just pure arrogance.
Secondly, there absolutely is debt. When a company goes into administration the assets are sold to pay out those who hold equity in the company. They're literally owed debt.
EDIT: To clarify for those responding saying that equity does not constitute debt...
Creditors and investors are different, absolutely. It is also correct that investors are typically paid last during administration (although investors may form agreements to come before other investors). Nonetheless, during administration, the administrator determines how much money the investors are "owed", which is literally the definition of debt.
No matter how many times you say that this situation is "literally the definition of debt" you're still not going to the legal definition of debt so that it applies here. Equity is not debt, they do both until eventually owing another entity money. But in a legal sense that is not literally the definition of debt, because it is also part of equity which again isn't debt.
From a practical perspective the difference is that with equity you accept a lower floor (you might get nothing) in exchange for a higher ceiling (your invest might 100x if the company goes public). That's the deal these investors signed up for and unfortunately for them they got option number 1. They're not owed anything because that's the deal they agreed to.
I have zero idea what the legal definition of debt is in the country/jurisdiction you live in. I also didn't specify what country I live in.
Additionally, my first point was one of metaphorical (social) debt.
Given the context and the fact I'm typing in English it ought to have been clear I was referring to the definition of debt in English. If that wasn't clear, I apologise for the confusion.
not to quibble, but no, they're not literally owed debt. The assets of the company are used to pay off any actual debt (payroll taxes, outstanding invoices to vendors, etc). Only then is any remaining money distributed to the equity holders. They take absolutely last.
They're not owed debt. They own a piece of the company. When the assets are liquidated they will get their share unless they are on the shit-end of a liquidation preference clause.
Firstly, to say there's no debt, monetary or otherwise, to someone who believed in your company enough to hand over their own money (or money in their control) to back you is just pure arrogance.
Secondly, there absolutely is debt. When a company goes into administration the assets are sold to pay out those who hold equity in the company. They're literally owed debt.
EDIT: To clarify for those responding saying that equity does not constitute debt...
Creditors and investors are different, absolutely. It is also correct that investors are typically paid last during administration (although investors may form agreements to come before other investors). Nonetheless, during administration, the administrator determines how much money the investors are "owed", which is literally the definition of debt.