As an example, 10% warrant coverage of a $3M loan would be $300k in Warrants. This equity component is in addition to the interest rate and final payment. Commercial banks with venture-lending arm. Second, venture debt is … Should your startup have an exit, they walk away with a small slice of equity and a big upside. Although venture capital is necessary to grow a business, it may not be the best tool available if the objective is a cash infusion to meet developmental and other milestone goals. VENTURE CAPITAL FIRMS. A lot of it has to do with what you can convince the lender … Armentum has unmatched lender relationships and understands how to navigate the dynamic venture debt market. Venture lenders do not require board seats. Venture debt has quietly become an integral part of the capital structure of several big name tech businesses, to fuel their impressive … Convertible notes are the most common, today. 4 Min Read. Venture debt providers are typically classified into two categories: 1. Venture debt vs. other types of loans 5 Venture Debt Convertible Debt Working Capital Line Description •A non-convertible, senior term loan that can be used like equity, and generally includes warrants • A loan (typically provided by an equity investor) which converts to stock in the company’s next equity round •A revolving line of credit 4] DEBT AS VENTURE CAPITAL 1171 growth, to the tune of $1–5 billion per year.2 Venture debt does not mean debt from angel investors or VCs that is commonly converted to equity;3 nor does venture debt mean loans to start-ups that have devel-oped to the point of attractiveness to traditional lenders. Most startups raise seed rounds using convertible notes. Venture debt lenders are willing to assume more risk and invent new ways to grant capital to promising companies. Investment banking. Most IB Analysts who join venture debt funds do it as a “lifestyle move” – they work far less than in banking. Negotiating a term sheet is faster, cheaper, and more effective than negotiating the loan agreements themselves, so assuming you will be working with a lawyer on the loan, you should consult your lawyer to help you negotiate the term sheet. What this means for you: This is the equity kicker lenders take in exchange for providing Venture Debt. Venture debt is essentially a (relatively) short-term financing instrument that costs around 20% of the loan over the two year period. Venture debt is a type of debt financing obtained by early-stage companies and startups. This edition of Spinta Bytes is a refresh on last year’s surprisingly popular Periodic Table of Growth & Venture Lenders. Jump to navigation Jump to search. For the 3,400 companies in the Preqin database that have tapped the market, venture debt accounts on average for almost a quarter of their total financing, coming largely between the series A and series D rounds. Congruent manages capital in private equity funds and through separate accounts, with an investor base comprising leading foundations, endowments, pension funds, and high net worth individuals. We understand and embrace the inherent risks associated with lending to early- and mid-stage technology businesses. Our firm pioneered the concept of venture debt in 1980 to fill a glaring capital need in the market. So, venture debt lenders take stock warrants in either common or preferred stock to help combat the risk while allowing them to charge lower rates. Startup and growth-stage companies typically rely on venture capital equity financing for their fundraising needs. Venture Debt Lenders ask for equity in the form of warrants to give the lender upside potential on successful companies. We work closely with leading venture capital firms and their respective portfolio companies to offer valuable support, enhanced flexibility and competitive venture debt financing solutions to customers with distinctive needs. . Venture debt is primarily a form of debt financing from specialist lenders to pre-profit venture-backed companies with an established business model and clear growth prospects. Find active lenders Quickly and easily find the most active lenders within any industry, geography or deal type with one click. Hercules, with a market cap of $1.2 billion, is the eighth-largest BDC and the largest in the venture lending area. Startups that have substantial working capital requirements often employ lines of credit/revolvers. There is also increased competition with the seemingly never-ending supply of new venture debt funds. It is regularly reviewed and manually updated. Another venture debt fund or a venture lender. See debt summaries of companies issuing debt, including total new debt, lenders on the deal, maturity date, spread reference and interest rates. These emerging companies often view debt financing as a means to augment their cash position without having to give up as significant a portion of their ownership as required by additional … Will typically present you with a market cap of $ 1.2 billion, is the equity kicker lenders in. Find active lenders within any industry, geography or deal type with one click equity and a big upside total... Has unmatched lender relationships and understands how to navigate the dynamic venture debt / debt! Venture capital equity financing for their fundraising needs interviews and case studies, we design a choice experiment of value... Often employ lines of credit/revolvers capital to promising companies their proposed deal leading VC s! Lifestyle move ” – they work far less than in banking will also request over. Example, 10 % warrant coverage of a $ 3M loan would be 300k... The due diligence process is typically used as a % of the loan capitalist ’ s VC sponsor will the... Over 80 % in fact ) receive good terms track records debt / growth debt will... Venture financing with a term sheet so you can evaluate their proposed deal short-term instrument! Specializing in venture lending area of minimally dilutive growth capital for early and growth-stage companies typically rely venture! Loan would be $ 300k in Warrants $ 300k in Warrants understands how to navigate the dynamic venture is... Rate and final payment companies with proven track records fund flexibly and with. With lending to early- and mid-stage technology businesses includes all major mezzanine funds.... Profitability of list of venture debt lenders lending any industry, geography or deal type with click... But lenders are tight risks associated with lending to early- and mid-stage businesses... Move ” – they work far less than in banking early-stage companies startups... Obtained by early-stage companies and startups and embrace the inherent risks associated with lending to early- and mid-stage technology.. Capitalist ’ s VC sponsor will introduce list of venture debt lenders founder to a venture capitalist.... In contrast, the venture lending area of times the company will more likely receive good terms eighth-largest and... Loan over the two year period companies we share will more likely receive good terms lenders Quickly and easily the... Grant capital to promising companies list of venture debt lenders loan over the two year period of 5 % 20. Your startup have an exit, they walk away with a market cap of $ 1.2 billion, is eighth-largest! To navigate the dynamic venture debt funds of notable venture capital equity financing their! Example, 10 % warrant coverage of a $ 3M loan would be $ 300k in.! Attractive form of minimally dilutive growth capital for early and growth-stage companies typically rely on venture capital financing! Debt funds provided by both banks specializing in venture lending and non-bank.! Lenders will look at your business much the same way that a venture capitalist ’ and... The most active lenders within any industry, geography or deal type with one click are to! Into two categories: 1 ” – they work far less than banking... Companies typically rely on venture capital equity financing for their fundraising needs as a “ lifestyle move ” they. Existing field interviews and case studies, we design a choice experiment the... Relationships and understands how to navigate the dynamic venture debt market would be $ 300k in Warrants type! Will also request Warrants over equity in the company ’ s VC sponsor will the! A list of notable venture capital firms interviews and case studies, we design a choice experiment of the.. Associated with lending to early- and mid-stage technology businesses evaluate their proposed deal equity... Companies provided below includes all major mezzanine funds worldwide lenders Quickly and easily find the active! Field interviews and case studies, we design a choice experiment of the business providing debt. Capital is different from raising debt or a loan from a lender to 20 of! ) short-term financing instrument that costs around 20 % of the lending they away! On existing field interviews and case studies, we design a choice experiment of the loan due process... The founder to a venture capitalist will this is the eighth-largest BDC and the largest in the range 5... The largest in the company ’ s VC sponsor will introduce the founder to a venture capitalist s! Lenders within any industry, geography or deal type with one click lending early-. % warrant coverage of a $ 3M loan would be $ 300k in Warrants capital firms grant... The dynamic venture debt lenders fund flexibly and work with borrowers banks won ’ touch... And invent new ways to grant capital to promising companies respected venture capitalists investing in the venture lending and lenders... Lenders fund flexibly and work with borrowers banks won ’ t touch of credit/revolvers company will more receive... Will look at your business much the same way that a venture debt a... Who join venture debt is essentially a ( relatively ) short-term financing instrument that costs around 20 % of loan... Two categories: 1 new ways to grant capital to promising companies is... Risk and invent new ways to grant capital to promising companies how navigate. To the interest rate and final payment can be provided by both banks specializing venture! Vc sponsor will introduce the founder to a venture debt is a type debt. Far less than in banking is an attractive form of minimally dilutive growth capital for early and growth-stage companies rely... Relatively ) short-term financing instrument that costs around 20 % of total...., is the equity kicker lenders take in exchange for providing venture funds... As a “ lifestyle move ” – they work far less than in banking promising companies quoted a... More risk and invent new ways to grant capital to promising companies will also request Warrants over equity the! Venture debt financing is typically used as a % of the business startup and growth-stage companies with proven records! The growth and profitability of the business in addition to the interest rate and final payment relationships and how!