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The essay is explicitly talking about the former. Rather than sell a bunch of dilutive equity at Series B, a company with decent recurring revenue could collateralize that revenue stream and sell it.

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In what situation would you opt for a dilutive series B where you had enough revenue that a bank would collaterize it for you?

If you are profitable, then it’s probably wiser to not take the dilution round. If you aren’t, your revenue is likely worthless as I can’t imagine a bank would have the risk appetite to turn a money losing venture into a profitable one by taking it over

You need the money to scale sales operations to the level of revenue.

Right, but if you were profitable and, I’m assuming the reason you needed the money was sound; you’d have to be incredibly unlucky if the only outside capital you could raise was a down round.

You usually only hear downrounds from companies that are struggling to keep the lights on

Selling equity dilutes, whether it is an up or down round. That sold equity is potential appreciation that the firm selling won’t participate in.

With debt, you promise a fixed rate of return instead, so the benefits are capped for the purchaser.

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