At a minimum, the business must:
Take advantage of current momentum and invest in your future upside. Whether this be investment in business expansion, product development or growth.
Have more time to achieve key milestones between capital raises, scale operations and strengthen your market position.
Complement an equity raise to minimise additional dilution. Receive c.20-30% of the amount raised in the equity round.
Execute on growth opportunities and investments when they arise.
Venture debt is a form of debt financing designed specifically for high-growth companies, typically those who have already completed a professional funding round from a venture capitalist, private equity or family office.
Venture debt involves providing capital in the form of a loan that is paid back with interest over an agreed period.
Unlike traditional bank loans that prioritise a company’s profitability, venture debt lenders look primarily at a startup’s growth potential.
Debt funding is provided as a loan, paid back with interest over an agreed term. Whereas equity financing, or venture capital, involves investors providing capital to start-ups in exchange for equity ownership.
Venture debt should be viewed as complementary to equity, where a hybrid funding model enables founders to achieve substantial growth whilst minimising overall dilution.
Venture debt funding is designed for scaling businesses, that have an established revenue profile, can demonstrate strong growth potential and a path to profitability.
Debt funding is typically for companies who have already completed a professional funding round – though this is not a mandate here at Mighty Partners.