1 

Eligibility

You have or are about to complete a Series A (or higher) fund raising round of at least £1.5mm, with a valuation of your company of at least £5mm.

2

Purpose

The purpose of venture debt is usually to top-up an equity raise, in order to:

- Increase the cash runway until the next funding round, and/or

- Minimise dilution incurred during the round

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There usually will be no significant covenants on the use of proceeds.  We will hold a fixed and floating charge over the business for the duration of the loan and will usually need to the senior-most lender, but may be flexible in allowing other lenders in as long as the business performs as expected.

3

Timing & Size

Venture debt is usually executed alongside the funding round (Series A, B, etc) or shortly thereafter. 

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Though the due diligence for Venture Debt is somewhat less extensive than for an equity fund raise, it can still take 2-4 weeks and should therefore ideally lined up alongside equity investors ahead of the round.  This will enable you to correctly ascertain exactly how much equity you will need.

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At Series A, Venture Debt is usually up to 25% of the equity round, or 10% of the Enterprise Value of the company, whichever is smallest.  For subsequent rounds of funding, Venture Debt can be a slightly larger percentage should the company's sales support this.  

4

Typical Terms

Establishment Fees: 2-3%

Interest Rate: 15-20%

Warrant: 20-50%

Duration: 3y (can vary)

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The exact details will depend on the company's financial strength and can offset each other (e.g. more warrant for less interest).