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Venture Debt is blowing up in Europe! 🌍💥 It’s already a big slice of the venture market pie. Here’s the lowdown: Investors lend startups cash with a fat interest rate (because banks won’t touch them). Startups pay it back at the next funding round. If the startup's value grows faster than the interest rate (spoiler: it often does), they get cash sooner and give away less equity. Win-win! 🙌 Check this out for more deets: https://lnkd.in/d4A5_epk #TechTalk #StartupLife #VentureDebt

In the past, a term sheet from renowned VCs was often enough to secure venture debt funding. However, in the aftermath of market disruptions and increased lender scrutiny, the landscape has evolved. What’s clear is that the bar for securing venture debt is now much higher, particularly for seed and early-stage startups—a shift that reflects a more cautious approach from lenders. At 5th Line, we understand the importance of adapting to these changes. We remain committed to supporting growth-stage companies as they navigate the complexities of fundraising, connecting them with our network of lenders to offer solutions that go beyond traditional financing without increasing equity dilution. For more insights, continue reading the article on PitchBook: https://hubs.ly/Q02pyBP80

Surprising consensus at @TechCrunch Disrupt 🚀🌐 As a representative of Icon.partners, a firm dedicated to helping innovative startups in their funding journeys, I recently encountered a fascinating twist at TechCrunch Disrupt While panel discussions on capital-intensive startups, all three panelists surprisingly dissented against venture debt as a go-to option 😱⚖️ This contrasting idea to the traditional narrative picked my interest. While venture debt has long been seen as a potential alternative to equity dilution, it's clear a deeper conversation is needed 🤔 👉 Venture debt offers undeniable appeal 📍Cost-effectiveness Compared to equity, it can be a cheaper source of capital 📍Preserving ownership Founders maintain control by avoiding significant equity dilution 📍Growth boost  It provides a targeted capital injection for strategic expansion 👿 But the devil's in the details, or how is said? 🔎 Restrictive covenants Lenders may impose limitations on cash flow management or future funding opportunities 🔎 Increased risk Debt adds financial leverage, potentially jeopardizing stability during economic downturns 🔎 Unexpected issues In challenging scenarios, repayment obligations can become a significant issue ✨ At @Icon_Partners, we believe in a holistic approach to startup funding 🌐 Corporate revolvers Ideal for companies with established revenue streams 🌐 Asset-based financing Leverages existing assets to secure 🌐 Government grants Explores funding opportunities from relevant government programs Remember, venture debt can still be a valuable tool in the right circumstances, especially for later-stage companies. However, thorough evaluation of terms and exploration of alternatives are crucial! 🚀 📢 What are your experiences with venture debt? Let's continue the conversation! Share your thoughts in the comments below 👇 🔥 #venturedebt #startup #funding #techcrunch #capital  https://lnkd.in/ddddf7a6

David Spreng, founder, CEO and CIO of Runway Growth Capital, just penned an eye-opening op-ed for Benzinga. He's shedding light on a game-changer for startups: Venture Debt. Why is it a big deal? Venture debt is less dilutive than traditional equity financing, offering founders and early investors a golden opportunity to hold onto a larger share of their company. This strategic move is crucial for those looking to steer their ship with full control and aim for maximum long-term returns. A client for nearly five-years, take a dive into David's insights and discover how Venture Debt could be the key to your startup's success and independence. Full article: https://lnkd.in/dRbgB4SB Impact Partners #VentureDebt #StartupOwnership #DavidSpreng #RunwayGrowthCapital #VentureLending #VentureFinancing #GrowthCapital

🗨"Venture debt has historically been used less in Europe than the US, in part due to a lack of education, Chafets added, but startup mindsets are changing. As the European ecosystem matures, the region’s startups are becoming more comfortable with venture debt as a financing tool." 🙇♂️I've followed this development from front row the past 7 years. As tech, SaaS, startup ecosystems, and funding markets mature, I beleive this trend will continue for many years to follow. Find out more in this recent data based post from PitchBook covering #VentureDebt👇 #Tech #Funding #Startups

👀 PitchBook's newest article: "Why some European startups are picking debt over equity" by Leah Hodgson looks straight out of a Fuse Capital blog: 💡 Here are some interesting excerpts: “There is more supply now of venture debt than there potentially was 24 months ago in the UK and Europe and we’re starting to see that being deployed.” "With less equity capital available, some start-ups have turned to debt to fund day-to-day operations and extend their runways. Although higher interest rates have made debt more expensive, venture debt can still be a cheaper option for those founders unwilling to see their share diluted. “Market conditions are making companies, especially mature ones, hesitant to raise equity capital due to potentially low valuations,” said Shmuel Chafets, founder and partner at Berlin-based VC firm Target Global. “Venture debt acts as a bridge, extending their runway until the market improves.” "Venture debt has historically been used less in Europe than the US, in part due to a lack of education, Chafets added, but start-up mindsets are changing. As the European ecosystem matures, the region’s start-ups are becoming more comfortable with venture debt as a financing tool." 🌍 The UK and EU markets are slowly catching up to the more mature, more established UK market, as more new players start to realise the opportunity there's in this. And as it's expanding, the ecosystem which comprises around 300 funds, can be difficult to navigate and make the most of. 🤓 Hire a specialist advisor who's pioneered venture debt from its European inception until today, with 550+ deals under their belt. That will allow you to cash in on this opportunity, and turn in the best possible term sheet you could get on the market. Contact Fuse Capital for more information 🚀 #financialadvisor #venturedebt #vc #alternativefunding #fundraising #techfunding #entrepreneur

David Spreng, founder, CEO and CIO of Runway Growth Capital, just penned an eye-opening op-ed for Benzinga. He's shedding light on a game-changer for startups: Venture Debt. Why is it a big deal? Venture debt is less dilutive than traditional equity financing, offering founders and early investors a golden opportunity to hold onto a larger share of their company. This strategic move is crucial for those looking to steer their ship with full control and aim for maximum long-term returns. A client for nearly five-years, take a dive into David's insights and discover how Venture Debt could be the key to your startup's success and independence. Full article: https://lnkd.in/d8NPzB8q Impact Partners #VentureDebt #StartupOwnership #DavidSpreng #RunwayGrowthCapital #VentureLending #VentureFinancing #GrowthCapital #VentureCapital #VC #PrivateEquity #PE

Venture debt deals for early-stage slumped by 39% in 2023, ending the year with just 665 transactions, per Pitchbook. Early-stage startups have been facing difficulties securing debt facilities since the implosion of Silicon Valley Bank. The situation is much worse for fintech and consumer tech startups, which have seen a huge drop in valuations. The lack of venture debt facilities for early-stage startups is surprising, given that they showed better resilience in equity funding than later-stage startups. This downturn can be attributed to the cautious approach taken by venture debt lenders, as they have to take calculated risks since their payouts are capped, unlike equity investors. Additionally, lenders need to carefully assess a startup’s ability to return the capital, with seed-stage startups having higher risk profiles. Despite losing venture debt market share from 50% to 20%, SVB “continues to do more venture debt lending than any other single institution,” claims its head of corporate affairs, Carrie Merritt.

At Capifly , we are big believers in the potential of the MENA startup ecosystem and the role that venture debt can play in unlocking that potential. Venture debt is rapidly becoming pivotal in MENA’s startup financial landscape, with remarkable growth since 2020: It reached $757 million in 2023 — a staggering 50-fold increase from 2020 levels. This trend is providing startups with greater flexibility and fueling innovation across the region. Reem Goussous and I explored this topic in depth in our article for NextBillion.net . Check it out here: #venturedebt #growthfinancing #MENA #fintech #shariahcompliant

📘 Given all the activity in the space hitherto, I see a surprising level of unawareness around venture debt in the ecosystem. Hence, happy to share some insights in my latest blog post on Venture Debt, which offers an alternative funding route for startups, often overlooked but increasingly crucial. Delve into key types of VD, use cases, repayment structures, differences against other forms of debt and venture financing and risk mitigation tools to price a venture credit. Plus, some notable players in the venture debt market. Let's goo! #VentureDebt #StartupFunding #VCInsights 🚀 https://lnkd.in/eB6PkhJb