Venture debt: Difference between revisions
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(Create page - source - EIB - https://www.eib.org/en/stories/what-is-venture-debt?utm_source=google&utm_medium=SearchAd&utm_campaign=2024_Venture_debt_story&utm_content=na&utm_term=na_na&utm_id=2024-12-23_01_en&gad_source=1&gclid=Cj0KCQiA9667BhDoARIsANnamQZ033mjw_ZpQ_JaLZ41-g8YBmXUwH1rxSjkFjdWzb2ywUlfTL6cBZoaAhWwEALw_wcB) |
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:It’s worth noting that any substitution - in place of equity - should only be executed in successful, growing companies that could raise equity, but choose not to - rather than those who cannot raise venture capital, and instead are seeking debt as a last resort." | :It’s worth noting that any substitution - in place of equity - should only be executed in successful, growing companies that could raise equity, but choose not to - rather than those who cannot raise venture capital, and instead are seeking debt as a last resort." | ||
''Diversify funding sources without dilution: financing through venture debt - Antony Baker, principal, Claret Capital Partners - The Treasurer - Issue 4 of 2024, p40.'' | :''Diversify funding sources without dilution: financing through venture debt - Antony Baker, principal, Claret Capital Partners - The Treasurer - Issue 4 of 2024, p40.'' | ||
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* [[Fintech]] | * [[Fintech]] | ||
* [[Incubator]] | * [[Incubator]] | ||
* [[Liquidity | * [[Liquidity]] | ||
* [[Mezzanine]] | * [[Mezzanine]] | ||
* [[Preference shares]] | * [[Preference shares]] | ||
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==Other resource== | ==Other resource== | ||
*[https://www.eib.org/en/stories/what-is-venture-debt?utm_source=google&utm_medium=SearchAd&utm_campaign=2024_Venture_debt_story&utm_content=na&utm_term=na_na&utm_id=2024-12-23_01_en&gad_source=1&gclid=Cj0KCQiA9667BhDoARIsANnamQZ033mjw_ZpQ_JaLZ41-g8YBmXUwH1rxSjkFjdWzb2ywUlfTL6cBZoaAhWwEALw_wcB What is venture debt? European Investment Bank (EIB)] | *[https://www.eib.org/en/stories/what-is-venture-debt?utm_source=google&utm_medium=SearchAd&utm_campaign=2024_Venture_debt_story&utm_content=na&utm_term=na_na&utm_id=2024-12-23_01_en&gad_source=1&gclid=Cj0KCQiA9667BhDoARIsANnamQZ033mjw_ZpQ_JaLZ41-g8YBmXUwH1rxSjkFjdWzb2ywUlfTL6cBZoaAhWwEALw_wcB What is venture debt? European Investment Bank (EIB)] | ||
[[Category:Accounting,_tax_and_regulation]] | [[Category:Accounting,_tax_and_regulation]] | ||
Latest revision as of 13:48, 25 December 2024
Funding - startups.
Venture debt is a loan to an early stage company that provides liquidity to a business for the period between equity funding rounds.
Typically, these loans are repaid within a period of 18 months or sometimes up to two-three years.
Most often, private venture debt providers (investment funds or banks) expect to be repaid from the proceeds of the next [equity] funding round.
(Source - European Investment Bank (EIB).)
- When venture debt doesn’t work
- "Shrinking businesses, with weak or falling margins are typically unsuitable.
- Very high [cash] burn [rate], inefficient businesses are not ideal candidates – and even less so should they appear to be structurally loss making.
- It’s worth noting that any substitution - in place of equity - should only be executed in successful, growing companies that could raise equity, but choose not to - rather than those who cannot raise venture capital, and instead are seeking debt as a last resort."
- Diversify funding sources without dilution: financing through venture debt - Antony Baker, principal, Claret Capital Partners - The Treasurer - Issue 4 of 2024, p40.
See also
- Business angel
- Cash burn rate
- Centre for Finance, Innovation and Technology (UK)
- Crowdfunding
- Debt
- Entrepreneur
- European Investment Bank (EIB)
- Financial technology
- Fintech
- Incubator
- Liquidity
- Mezzanine
- Preference shares
- Private equity (PE)
- Profit margin
- Seed
- Series A
- Series B
- Startup
- Venture capital
- Venture Capital Schemes
