October 16, 2013 - In my prior post, I gave an overview of the theory behind financial covenants in venture debt deals and some basic examples of the types of covenants used by lenders. With this post, we will take a deeper look at what happens when a covenant is violated, and the pros and cons of venture debt deals with covenants.
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.
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.
September 5, 2013 - In my first post in this series about Understanding Venture Debt, I provided a quick overview of the various types of debt facilities available to venture backed companies. With this post I will provide an overview of two types of institutions which provide the debt financing and the relative cost of capital of each, as this plays a vitally important role on overall venture debt deal terms.
August 20, 2013 - There are several different forms of venture debt, and stepping back and viewing the issue at a high level makes sense in helping to understand the whole. Venture debt ostensibly refers to debt financing which is offered to companies who have a professional investor as a significant equity-holder in the company.