Venture Debt - Loan origination & servicing + Case study
Hi, I'm currently interviewing at a venture financing firm focused on venture debt, and was wondering if you guys have some advice on loan origination & servicing. For instance, what should I look at specifically in terms of:
cash balance
financial projections
burn
break even/profitability
anything else?
and how to determine loan amount, duration, IR, interest only period from that?
Also if anyone knows how to prepare for a venture debt case study or point me in the right direction that would be fantastic! Thank you!
Not too versed in this but at the early venture stages things differ wildly. What sector is the company in for this case study? Is this a newly seeded tech company or a biotech that has had three rounds of financing but is still nowhere near turning out a drug?
For say a SaaS / ecommerce or consumer business
Maybe structure the debt amount based on ARR as a lot of the tech buyouts are structured based on ARR multiples. Duration is probably 3-5 years as a lot of these venture debt transactions are bridging the company to its next capital event (e.g. IPO, equity round, sale, etc.). Return is likely in the HSD or LDD ballpark (cash / PIK with some warrants upside). Also the size of the firm matters a lot too - small venture debt and large venture debt are fairly different
Disclaimer: I am not really in the space either so take it with a grain of salt.
Hey, I also have a venture debt case study coming up and wanted to find out if you were able to share any info on what your case study was like? Thanks!
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