what is venture debt?
Venture Debt provides financing to emerging growth companies at a stage when they typically cannot qualify for traditional debt financing from a commercial bank or other traditional lenders. It mirrors the mezzanine finance facilities that large, established corporations utilize as a hybrid between debt and equity. However, Venture Debt is targeted at much younger and nimbler companies at pre-IPO / Buy Out stage and complements the equity financing they receive from traditional Venture Capital firms.

A Venture Debt loan enhances the cash buffer of a company over a limited time horizon and can help leverage the equity capital and increase the return for entrepreneurs and venture capital investors. It is routinely used to achieve certain milestones in a company's growth cycle e.g. bring company to the next technology / clinical trial stage, complete product commercialization stage, attain profitability or bridge the cash gap up to a Buy Out exit.
A Venture Debt loan is significantly more flexible than a standard lending offer from a commercial lenders, such as a bank. It is generally secured against the assets of the company and can be highly customized to the individual situation of the borrower, his cash flow projections, growth milestones, and working capital dynamics. It often includes some warrant, option participation rights or convertibel instruments. Some of our investee companies even prefer hybrid financing forms combining elements of VC–style equity capital with fixed-rate loan financing. The common factor is the flexibility and adaptibility of the credit offer to the special needs of the venture.

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