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Insights

Venture Debt: How Covenants Can Be Good, Bad or Ugly

// Zack Mansfield

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.
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Q3 2013 Venture Fundraising Update

// Wiley Becker

October 7, 2013 - In Q3 2013, 56 US venture capital funds raised $4.1B, which represents a slight 2% decline in the number of funds and a 7% fall in the amount of capital raised on a rolling four quarter basis.  Consequently, average fund size is also down 5% to $76MM.
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Q2 2013 Venture Performance Update

// Wiley Becker

October 4, 2013 - The 10 year time horizon of the US Venture Capital Index ® by Cambridge Associates LLC continued its improvement in Q1 2013 to 7.8%. However, due to a resurgence in the public markets, average venture capital performance fell slightly below the public indices in the sub 10 year time horizons. The Late Stage US Venture Capital Index still outperformed the public indices in the five year time horizon, while the Early Stage Index continued to outperform dramatically over the 15 and 20 year periods.
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Sophia in Absentia (Absence of Wisdom)

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October 4, 2013 - The fiscal tragedy playing out in our nation's capital will have real consequences, both intended and unintended, in the days, weeks, and months to come.  At issue are two critical elements: the federal budget and the debt ceiling.  While these are two distinct and separate concerns, the political climate is such that neither topic will likely be resolved before their respective deadlines. 
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What Went Wrong? Expectations Matter.

// Jim Anderson

October 2, 2013 - Five years ago we found out who was not too big to fail. Lehman Brothers went down on September 15, 2008, with over $600 billion in assets, setting off a remarkable chain of events. A few days later John McCain suspended his presidential campaign and flew to Washington, D.C. where he generally made a fool of himself, thus removing any doubt about the outcome of the election in November.
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The Top Five BAD Reasons to Take on Venture Debt

// Mike Berrier

October 1, 2013 - At Square 1 Bank, we’re dedicated to the start-up marketplace. As lenders, we focus on working with institutional venture capital firms and the companies they fund.  Lots of those companies are still developing their product or service. Others have reached the point where they’re figuring out how to attack the market, and still others are working to maximize profitability.
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