There are several forms of venture debt. Convertible notes are the most common, today. Most startups raise seed rounds using convertible notes. Startups that have substantial working capital requirements often employ lines of credit/revolvers. Last, many startups take out term loans. They borrow money for several years and repay it over time. Venture debt can supply additional capital for a startup to grow at a lower cost of capital than equity. And the difference can be material.
Ten Questions Every Founder Should Ask Before Raising Venture Debt
Here’s an adage that says your first job as a startup CEO is to make sure your company never runs out of cash. When financing a growing company,venture debt can be a great supplement to venture capital. Much has been written to help founders think through venture capital, but venture debtremains a bit of a black box.
What is Venture Debt and How Should Start Ups Use It?
There’s been a lot of digital ink spilled around the various types of capital available to startups today. At NextView, for instance, one of our more popular posts centers on atypical seed rounds to know. Today, we wanted to share some basics of another source of capital: venture debt. What is it, and how should founders think about it?