Venture Debt is an alternative source of capital for start-ups that are facing cash constraints or having difficulty closing a round of financing. It can help venture capitalist (“VC”) backed start-ups in their growth journey and create an optimal funding structure, whilst enhancing stakeholders’ value.
Venture Debt is often offered to firms that have completed one or more rounds of VC equity funding. They are businesses that have a history of operations but do not have enough positive cash flows to qualify for traditional loans. Such organizations generally employ funding to meet planned milestones and buy the capital assets required to do so.