It's Monday, time for MBA Mondays and the next post in the Startup Financing Options series. Today we will talk about Venture Debt.
If there were two words less likely to be found together, it would be venture and debt. Startups are not credit worthy enterprises. They have little to no assets and no cash flow. Equity is the appropriate way to finance startups.
However, there is a large, growing, and vibrant market for something called Venture Debt. It is indeed debt, largely provided by a number of banks and finance companies who specialize in this market. The terms are usually three years, interest only, balloon payment, with warrants for the equity kicker. Now that I've just thrown out a bunch of buzzwords, I'll explain each of them.
To read the full, original article click on this link: A VC: Financings Options: Venture Debt
Author:Fred Wilson
