Venture Debt Financing Options: Growth Capital

May be appropriate for a company looking to extend its cash runway and leverage its existing equity with minimal dilution. The company may not have an abundance of hard assets to use as collateral, but wants additional operating capital for growth. Typical structure would include an all asset lien (with a negative pledge on intellectual property) amortized over a 3- to 4-year term. This type would be more expensive than equipment or accounts receivable financing, but is a good option for a firm that wants to “buy time” in order to reach certain milestones or inflection points. Liquidity of borrower and venture capital investor strength are main factors in determining eligibility.

Case Study
A late stage Venture Capital backed Bio-Tech company was seeking debt to extend its runway. However, the company had very little collateral with which to secure debt financing. This case study illustrates the benefit of Growth Capital (also known as an “airball” by lenders or ”Venture Debt”) as a form of debt financing for firms with limited tangible collateral.

Using Growth Capital to Maximize Runway Exension