October 1, 2013 - There is no way to talk about venture debt without bringing up the notion of financial covenants. The simple mention of the word “covenant” evokes a connotation of doom and fear in the hearts of many entrepreneurs and equity investors alike. This dread is perhaps caused in part by horror stories of overzealous lenders using a covenant trip to invoke remedies (read: sweep cash or foreclose on assets), which led to the demise of a company.
October 1, 2013 - In Q3 2013, there were 107 venture backed M&A transactions with $4.9B in disclosed deal value. While up quarter on quarter, number of transactions remains down 4% on a rolling four quarter basis and disclosed value is down 22% over the same time period. However, disclosed deal value is highly dependent on the mix of M&A deals disclosed and the number of deals disclosed is also down 6% on a rolling four quarter basis.
September 19, 2013 - The Federal Reserve surprised investors on Wednesday, choosing to maintain its aggressive asset purchase program. While the immediate response is enthusiastic, longer term implications are uncertain.
September 18, 2013 - The first time I heard the phrase “country risk” associated with the United States of America I was at an international private equity conference in the fall of 2009. I was shocked that European investors were applying analytical techniques to the U.S. that were more appropriate for unstable developing countries.
September 18, 2013 - On April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups Act (the “JOBS Act”). The primary intent of the JOBS Act is to drive job creation by making a number of significant changes to federal securities laws which shall facilitate startups and other emerging growth companies raising capital. In addition to changes which ease restrictions placed on private placement offerings and Securities Exchange Commission (“SEC”) shareholder registrations, the most highly anticipated provisions of the JOBS Act is the enablement of “crowdfunding,” or the ability to sell securities in small amounts to a large number of investors. The changes brought by the JOBS Act will likely have a significant impact on how startups raise capital.
September 18, 2013 - In my first two posts on Understanding Venture Debt, I provided a general overview of different types of venture debt facilities and a brief look at the banks and funds that are actively involved in the space. With this post I hope to shed some light on one of the less-obvious, but highly important, aspects of the venture debt landscape: the “implicit contract” between venture capitalists and venture lenders.