When access to capital is critical to take your business to the next level, venture debt financing may be the solution.
What is Venture Capital?
Lack of capital is one of the primary reasons start-up businesses fail. Venture capital financing is a financing option mainly used by start-ups that need extra capital to get off the ground. VC is money that investors provide to start-ups and early-stage companies that have the potential to reshape markets and grow quickly. The money deployed by a VC firm usually comes from institutional investors, corporations, or wealthy individuals in exchange for an ownership stake.
If you’re the owner of a growing start-up company, chances are at some point you may require more working capital.
Unfortunately for most entrepreneurs, that means someone else (like a venture capitalist group) is going to own a large stake in your company. Depending on your situation, that may not be the best outcome for someone who built the company from the ground up. Venture debt firms, however, typically don’t require giving away as much equity as a venture capital firm.
Venture debt, while not a direct replacement for venture capital, is becoming increasingly popular, especially because venture debt firms do not tend to take as much equity in a company as a venture capital issuer would. So, what is venture debt? Venture debt is a non-convertible, senior secured loan offered to venture-backed new-age businesses. As a strategic tool to complement equity financing, it offers a wide range of useful benefits to new-age businesses if implemented effectively.
Main Uses for Venture Debt
- Extend the cash runway of a start-up to the next valuation driver, i.e., venture lending to reduce equity. By decreasing equity, venture debt can be leveraged to ensure the next series is raised at a higher valuation, resulting in less dilution of equity.
- Extend the runway of a company to be cash-flow positive, i.e., venture debt instead of equity. This reduces equity dilution for employees and investors while also driving your company forward during a crucial period of growth.
- Serve as a cushion for what could go wrong, i.e., venture lending to bridge the gap until your company is back on track and avoid a penalizing down round.
The Benefits of Venture Debt Financing Services
With venture debt, startup companies and growth companies that don’t have positive cash flows, significant assets for collateral, or good credit histories, can gain access to growth capital. With a reliable venture debt provider, companies can access growth capital while minimizing their equity dilution and not giving up as much control in their company. Venture debt financing is more flexible, is quicker, and is significantly easier to obtain than traditional lines of credit. Finding a reputable venture debt lender can give your business the financial freedom it needs to grow.
That’s where Viva Capital comes in. As a trusted venture debt provider, we offer venture debt financing, which is a way to raise the same amount of capital without relying solely on a venture capital firm that will require an ownership stake. Through venture debt financing, you don’t have to give board seats to the lender, and both you and the initial investors continue to own the company.
If you’re a company that is in the early stages of building your balance sheet, the traditional route is to offer equity of your company in exchange for a cash infusion. With venture debt financing, you’re leveraging both equity and debt, meaning said equity is less diluted between the partners involved.
At Viva Capital Funding, we want to help you get the best out of your company. To us, that means helping you retain as much control as possible. Hold on to your equity and take your start-up to the next level with us as your venture lenders. Choose a venture debt financing firm like Viva Capital and build YOUR company.