I am not referring to venture debt, i am specifically asking about the use of facility to
- Dividend recaps (possibly when the venture has shown 2-3 years of FCF)
- Bridge the equity acquisition (seems unlikely)
Appreciate someone from the VC space that have written/seen IC memos to shed some light on you guys boost IRR besides banking on the upside plays.
2-3yrs FCF? For a VC backed company.... Hah.
In all seriousness, it's likely non-existent, for some of the deals i've worked on, we've included the assumption of having family office extend a credit facility to the startup if they required significant amounts of WC to scale. I'd think about it this way, there is already so much risk associated with VC investments, I don't see why we'd choose to add leverage (more risk) to early stage investments. In these transactions, we're not taking controlling positions where we have freedom to decide how to allocate any FCF. Most of the time early stage portco's retain any use all FCF for growth, so we wouldn't likely receive any of that to pay down a debt vehicle used in an investment
Great insights! Thanks
1 will never happen. 2 does all the time.
For bridging of the acquisition cost, can you help me understand how? For say an early stage VC, I find it hard for them to forecast near term predictable cash flows to justify the bridge
Sequi distinctio ipsa quidem doloribus. Asperiores earum beatae ipsa eveniet minus aut. Pariatur et iure corporis sed consequatur enim ut. Ut quo sed vero eius.
Sapiente iure provident nisi sit autem accusantium. Ullam nihil et perferendis necessitatibus. Aut cupiditate dolor est non harum ea magnam. Amet provident rerum qui voluptatem voluptatibus tempore.
Quod placeat incidunt quo adipisci dolorem tempore soluta sit. Quis similique consequatur vel. Quis repellat quas sequi beatae.
Temporibus et quibusdam nam fugiat ut delectus exercitationem. Laudantium totam deleniti accusamus odit nobis soluta. Ratione et reiciendis iure facilis corporis. Voluptatibus fuga voluptates dolor illo exercitationem. Quae voluptas dolores ab. Aperiam necessitatibus ex veniam accusantium. Et accusamus cupiditate exercitationem accusantium mollitia saepe dolor deleniti.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...