Startup Funding Espresso -- How to Use Venture Debt
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Venture debt is not for every startup or for all fundraises. It is best used in conjunction with an equity raise. The equity funding provides ongoing working capital that doesn\u2019t need to be paid back. It works well between equity raises from institutional investors. The business must be up and running with stable revenue. Those with recurring revenue are a good fit. Those with healthy gross margins also do well.\xa0 Investors will look at the cash flow of the business, so it\u2019s important to have a healthy cash flow statement. It doesn\u2019t work well for seed startups that are still looking for product-market fit. Established businesses will find it easier to raise venture debt as the investor will look at the company\u2019s traction, track record, business model, and previous fundraises.\xa0 Venture debt raises are typically limited to 25% of the equity raises, so a $3M fundraise most likely will not exceed $750K of venture debt.\xa0 Most loans last around four years, so it\u2019s not often used for working capital but rather for specific projects. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today. ___________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0 For Feedback please contact info@tencapital.group\xa0\xa0 Music courtesy of