VentureDebt.tech
Guide to venture debt and revenue based financing companies in Europe
How does Venture Debt work?
Venture debt (or growth debt) is a lending arrangement typically offered by specialist funds to venture capital-backed but still loss-making high growth technology, life sciences, or similar businesses. Loan providers effectively agree to largely cap their returns (hence reducing the dilution vis-a-vis venture capital financing) but in return require to be the first in line (taking a senior secured position) in the repayments waterfall. Minimum business size and the facility requirements typically apply (e.g. loans are likely to be 1m+, whereas revenue-based financing can be from 10k+).
Typical venture debt arrangement consists of:
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3-year monthly amortising (can include an interest-only period in the beginning) senior secured term loan, with a fixed interest rate
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Likely would include negative covenants and sometimes also financial covenants
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A warrant agreement, giving the debt provider the right to acquire a small portion of shares at the current valuation, exercisable at a liquidity event (a sale of the business or an IPO). This gives away some equity upside but reduces the cash costs of a loan
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Upfront and back-end fees
Venture Debt providers
News & Resources
Kiadis announces the placement of €5 million convertible bonds with Kreos - Yahoo Finance
01/10/20
Berlin-based Infarm raises €144 million during pandemic to grow largest urban vertical farming network in the world - EU-Startups
17/09/20
Harbert European Growth Capital Fund II provides Butternut Box with debt capital - Business Leader
07/09/20
Selecta Biosciences Secures Up To $35 Million Debt Financing with Oxford Finance LLC and Silicon Valley Bank - GlobeNewswire
01/09/20
FireMon Secures $40 Million Debt Financing with Silicon Valley Bank - Security Boulevard
01/09/20