Venture debt providers

The ultimate guide to venture debt

Fund to ProfitabilityVenture debt can bridge a company to profitability. This is a great use of debt as it propels the company forward during a critical period of growth and can completely eliminate the need for a final round of equity financing. Debt financing for startups You can read more here about how to apply for venture debt financing from the EIB and the next steps of the process.

Capital venture debt

Hence WeWork: a company that absorbed billions of dollars of capital for the purpose of subletting office space, had to bail on its I.P.O., and cut loose its offending C.E.O. with a severance package of more than a billion dollars. The WeWork debacle is illustrative not because it’s a case of foolish investment and unchecked mismanagement (life at sea!) but because the company gained value during these shenanigans, at least until it filed for I.P.O.—which startups are doing less often than they once did. Understanding your funding options relative to your stage of growth Venture debt isn’t anything new. It’s been around for decades. It’s a loan or line of credit, usually with warrants — options that give the holder the right to buy a company’s stock sometime in the future — that are often backed by a startup’s assets. It is typically offered by specialized banks or lenders to help fast-growing, VC-backed companies get bridge financing until they are ready to raise another round of venture capital — or go public.

10 top venture debt firms

Most commercial banks do not offer venture debt. Instead, the majority of venture debt financing is provided by specialized banks or non-traditional lenders such as Silicon Valley Bank, Western Technology Investment, Trinity Capital and TriplePoint Capital. Other sources of venture debt include hedge funds, private equity firms and business development companies. Who Should Consider Venture Debt? Plus, because venture debt is generally available for growth-focused companies, lenders need to know that you’ll have the ability to meet repayment obligations. Being backed by venture capital helps assure them of this.

Typical venture debt terms

Both companies and investors learned quite a bit from this time, and are more prudent about their use of debt and about considering what the debt will mean to their companies if they encounter difficult times. The mindset that debt is just a cheap form of equity does not work, because if things do not work out, the company is still on the hook to pay back the debt. To read this article, you need to sign in. Most estimates from academics and practitioners peg the size of the venture debt market at roughly 10-15% of the venture capital market. This translates into total annual venture lending volume in excess of $10B worth of new loans originated per year. Further, it is estimated that upwards of 30% of VC-backed now access venture debt.