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Sophisticated legal counsel for debt facilities tailored to technology, life sciences, and high-growth companies at every stage.
Venture debt provides debt capital to venture-backed companies, complementing equity financing rounds without additional dilution. These facilities are typically provided by specialized lenders who understand high-growth business models and accept equity risk through warrant coverage.
Unlike traditional lending, venture debt focuses less on current cash flow and more on runway extension, growth funding, and bridging to the next equity round. Documentation balances lender protections with operational flexibility required by fast-scaling companies.
Structuring venture debt term loans with interest-only periods, warrant coverage calculations, and covenants tailored to growth-stage companies.
Negotiating warrant coverage percentages, exercise prices, anti-dilution provisions, and integration with existing cap table structures.
Delayed draw facilities and growth capital commitments tied to performance milestones, revenue targets, or subsequent equity raises.
Alternative structures where repayment scales with revenue performance, providing non-dilutive capital with flexible amortization.
Subordination agreements with equity investors, consent rights, and waterfall provisions protecting venture capital priority.
Short-term facilities bridging equity rounds or extending runway through fundraising processes with appropriate pricing and terms.
Term facilities with 12-24 month interest-only periods, amortization beginning post-IO, warrant coverage of 5-15% of loan amount, and financial covenants focused on minimum cash and revenue performance.
Asset-specific financing for lab equipment, technology infrastructure, or manufacturing assets. Security interests in equipment with depreciation-based advance rates.
Credit facilities secured by subscription revenue streams or recurring revenue contracts, with borrowing bases tied to annual recurring revenue (ARR) or monthly recurring revenue (MRR).
Multi-tranche commitments with subsequent draws contingent on milestone achievement, equity raises, or revenue targets. Provides committed capital while managing lender risk.
Our network has extensive experience with venture debt lenders, growth-stage companies, and venture capital investors. We understand the market standards for warrant coverage, the practical implications of growth-stage covenants, and the coordination required between debt and equity capital providers.
Whether you're a specialized lender providing venture debt, a portfolio company raising non-dilutive capital, or a VC investor ensuring appropriate debt subordination, we bring focused venture debt expertise to support your transaction.
Venture debt makes sense when: (1) you've recently closed an equity round and want to extend runway 6-12 months without dilution; (2) you're between funding rounds and need bridge financing to reach milestones; (3) your revenue is growing but you're not yet cash-flow positive; or (4) you need working capital for specific initiatives (sales expansion, inventory buildup) without triggering a full fundraise. Avoid venture debt if you don't have 12+ months of cash runway, haven't raised institutional equity, or can't service interest payments from operating cash flow or existing capital.
Warrant coverage typically ranges from 5-15% of the loan amount, depending on company stage and risk profile. Early-stage companies (Series A/B) see 10-15% coverage, while later-stage growth companies might negotiate 5-8%. Warrants are usually exercisable at the most recent equity round price (or a small discount), vest immediately, and have 10-year terms. Strike price and valuation are critical negotiation points—some lenders push for ratchet provisions if valuation declines, while companies prefer fixed strikes. Warrant coverage is additional compensation beyond cash interest for venture lenders taking pre-profitability risk.
Venture debt has minimal financial covenants given most companies aren't profitable. Typical covenants include: (1) minimum cash thresholds (e.g., maintain €2M liquidity), (2) material adverse change provisions, (3) restrictions on acquisitions or fundamental business changes, and (4) equity raise requirements (must raise €X within Y months). Unlike corporate debt, there are rarely leverage or coverage ratio tests. Most facilities include acceleration triggers tied to equity round failures, material litigation, or regulatory actions. The focus is on liquidity preservation and continued equity backing rather than earnings performance.
Yes, but careful structuring is required. Venture debt lenders typically require subordination agreements with convertible note holders, establishing payment priorities and clarifying what happens upon conversion or maturity. SAFEs (Simple Agreements for Future Equity) convert automatically at qualified financings, so venture debt terms must anticipate this. Key issues include: whether SAFE conversion creates senior equity that dilutes warrants, how converted equity affects future fundraising requirements in debt covenants, and whether debt matures before or after anticipated SAFE conversion. We coordinate these instruments to avoid conflicts and ensure all parties understand priority and conversion mechanics.
Venture debt typically includes prepayment provisions requiring repayment upon exit events. In acquisitions, debt is usually repaid from transaction proceeds before equity distributions (alongside any transaction fees or deal expenses). In IPOs, debt might remain outstanding if maturities align with capital markets access, or companies might refinance with cheaper capital post-IPO. Warrants accelerate—in acquisitions, they're typically bought out at the transaction valuation; in IPOs, they convert to publicly tradeable shares (with lock-ups). Negotiating warrant buyout prices and acceleration mechanics is critical during initial venture debt structuring.