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Venture Debt

A loan to a venture-backed company, typically from a specialist lender or bank, sized against the last equity round rather than against cash flow, and usually carrying warrants. It extends runway without pricing a round, and it ranks ahead of every share class if things go wrong, which is the whole of its risk.

Practise it

The same cheque written six ways: common, non-participating preferred, participating preferred with and without a cap, a SAFE still unconverted and a convertible note. Slide the exit value and watch who gets paid, in what order, and where each instrument converts.

Open Exit Waterfall Lab, free, 12 min

Where Venture Debt comes up

Keep reading

The venture capital hub

Related Venture Capital terms

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