Emerging companies are often in need of, and are looking for,
cash – typically to extend their "runway" before
having to raise additional equity.
Venture debt is a compliment to venture capital, allowing
startups to borrow money and establish lines of credit pre-cash
flow. If your startup is successful, you stand to gain more from an
exit. If it fails, you will be held more accountable than by
venture funding.
Confident you won't fail? Then read on:
Like any other type of debt, you have to pay it back, which
could have a high interest rate. Collateral is typically in the
form of company assets, so if it can't be paid back, the
company could be liquidated.
Debt is a word that carries negative connotations and
consequences, but has some advantages over equity. Most
importantly, you'd retain a greater portion of the company.
Venture debt could also be attractive to VCs, the extra capital
from a third party mitigates risk and could increase runway to the
next
