Startup Funding Espresso -- What Is Venture Debt?
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Venture debt is on the rise in the startup world as more startups find it a useful part of their fundraise strategy. It\u2019s a form of debt financing for venture-backed companies that lack the assets for traditional debt funding.\xa0\xa0 Venture debt has been around for as long as venture capital has been writing checks for equity investments.\xa0 It\u2019s often used in conjunction with an equity fundraise. It typically runs for three years and is secured by the company\u2019s assets.\xa0\xa0 Venture debt reduces dilution and gives the startup more runway before the next fundraise. It lets the startup acquire more capital without setting a valuation for the company which is advantageous in advance of a new round of equity funding.\xa0 Venture debt does not take board seats and is often cheaper than bank loans. Venture debt is a more quantitative decision than equity capital which is more qualitative so the closing is typically faster. The disadvantage is that it must be paid back in the near term and interest rates are typically higher than bank debt. 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