Founders new to venture lending or venture capital firms may feel a little lost. That’s why at Golden Section, we offer more than just funding.
venture debt lenders
Golden Section is more than a venture capital fund – we’re a founder’s firm that offers consulting, technical expertise, and other services in addition to funding.
Many B2B SaaS startups could benefit from the technical expertise and advice of experts who have previously launched their own startups in the past, with roadmaps, playbooks, and best practices.
Golden Section is a partnership for founders and startups to experience meaningful and scalable growth. Golden Section also offers similar services to those of venture debt lenders, offering founders the ability to access an increased line of credit without leveraging equity in the company. Founders interested in pursuing Golden Section for venture debt can request a demo or call that includes a venture debt calculator to determine how much credit would be accessible.
Venture debt interest rates
Venture Debt Providers
Unlike venture capital firms, venture debt providers do not require seats on the board of a company. They are also less likely to invest in riskier business investments, as venture debt is usually paid off through revenue. Venture debt lenders need to be able to readily believe that debt will be paid off in full through the contractual repayment plan. Even founders partnering with Golden Section for venture debt still receive access to our fount of knowledge when it comes to growing B2B software as a service company.
There are many reasons that a founder may choose to take on venture debt rather than venture capital.
It’s one of Golden Section’s goals to help founders exit with as much equity as possible.
Taking on venture debt rather than venture capital is just one way of maintaining equity within the startup. Golden Section also believes that taking on venture debt is about more than achieving higher capital – it’s about strategizing towards a revenue growth flywheel that sustains and grows the startup as a whole, independently.
Venture Debt Vs Bank Loan?
Many founders may begin with one daunting question: venture debt vs bank loan? While venture debt may seem more intimidating or harder to achieve, bank loans can also be difficult to achieve for many kinds of B2B industries. Not only that, but bank loans may not be ideal for businesses for many reasons. Interest rates in a bank loan can be wildly out of a founder’s control and fluctuate, not to mention loan repayment. Venture debt interest rates, however, are a predetermined rate at closing and are typically somewhere in the low to high teens.
Many banks do not find startups to be valuable investments because of the risk attached to a startup company, which can often fail. Banks rarely recoup any interest from a failed startup, and interest is the main form of profit in a bank loan. Therefore, they have very little to gain from investing in a startup and will choose to not. Venture debt lenders, on the other hand, rely on the startup’s access to other forms of venture capital as their primary repayment source. Venture debt lenders and bank loans are alike in the sense that neither lender requires equity dilution, which is important to startup founders. For lending venture debt examples, it could be helpful to view a portfolio provided by an actual venture debt lender such as Golden Section’s .
venture debt vs bank loan?
Venture Debt Firms
In its most basic definition, venture debt firms are organizations that offer loans to startups.
A list of venture debt firms can be found in many places online. Golden Section Lending is a venture debt firm that doesn’t only provide flexible credit lines of up to five million dollars, but also access to industry expertise and best practice plans to grow your business. The biggest venture debt firms may not have whole teams of people dedicated to founder and startup success – instead, only concerned about seeing returns. Golden Section Lending seeks to partner alongside founders and their startups to propel B2B SaaS companies toward sustainable, scalable, and independent growth.
As a beginner or a founder who is not the most technically experienced, it can be difficult to know the differences between venture debt vs venture capital. The biggest difference is when it comes to equity. In venture capital, equity in a company must be leveraged to receive funding. This means giving up important sway or control over an aspect of a company to those who are investing in it. This can feel wrong to founders for a number of reasons – after all, it’s their company and their idea. They don’t want to hand over the reins to anyone else, investor or not. In venture debt, equity is not wagered. Instead, founders pay back their loans with interest at predetermined venture debt rates. Lenders keep portfolios of all their investments to showcase venture debt examples and how their investments can propel companies to success.
venture debt term sheet
Venture Debt Terms
When first beginning to search for venture capital and venture debt companies, it can be difficult to learn all of the vocabulary. For example, venture debt terms are not words that are commonly used while discussing venture debt vs venture capital. Rather, a venture debt term sheet is an informal agreement or a nonbinding contract that venture debt companies give to startups and founders when they’re considering a potential investment. A term sheet will commonly include details such as the size of the loan, the predetermined venture debt rates of interest, any sort of fees or clauses, as well as the duration and repayment schedule of the loan. Many venture debt companies use an ARR calculator to determine how much they should loan to a startup.
Many of these term sheets are posted online. If you are looking for an example from one of the largest venture debt lenders, searching for a silicon valley bank venture debt term sheet may be useful. However, going with the biggest venture debt lender may not always be the best move for many startups. Golden Section Lending provides much more than lending when they partner with startups and founders. Founders who partner with Golden Section also have access to decades of experience from industry experts who have successfully exited a startup.
Venture Debt vs Venture Capital
venture debt term sheet
While it can be intimidating to research venture debt for startups, venture debt can be a great complement to venture capital. When it comes to startups, it’s often not about venture debt vs venture capital, but about how founders can use both strategies to propel their company to independent growth and revenue. Debt funding for startups is a way of increasing access to credit without giving up equity. This is important, especially because if a startup is in the stage of seeking venture debt, they have likely already achieved venture capital, meaning that its equity has already been diluted. It’s important not to give up any more equity than is strictly necessary.
Debt funding for startups
Venture Debt For Startups
When seeking venture debt, it’s important to understand what venture debt is and how it works. In order to do that, researching venture debt examples can be helpful. Searching for venture debt SVB or finding examples of agreements like the silicon valley bank venture debt term sheet might let a founder know what to look for in a venture debt term sheet. Many debt lenders use an ARR calculator to determine the size of the loan. Venture debt excel models can also be used to try and determine a potential loan size. After a founder receives a term sheet, it will state the size of the loan and also the venture debt interest rates. Interest rates on venture debt are predetermined and may be lower than the interest rates of bank loans. However, it can vary from lender to lender.
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a way to protect equity within a startup
Venture Debt Structure
A debt structure is a name for the specific features of any given loan such as the maturity, repayment terms, and prepayment provisions. A typical venture debt structure is a “non-convertible debenture” or NCD. An NCD is a coupon-bearing bond issued by the borrower to the lender. In addition, the lender also has the ability to acquire equity warrants of the borrower. This warrant gives the holder the opportunity to subscribe to equity at a certain price within a specific period of time. Not all venture debt lenders do this, which is why venture debt is seen as a way to protect equity within a startup. A list of venture debt funds can be found online and many rolling publications of venture lenders are published each year.
A venture debt term sheet should clearly define the structure of the debt, as well as the venture debt rates and the revenue calculator that was used to determine the terms. Searching for SVB venture debt as an example may help new founders to understand how venture debt works. However, Golden Section also partners with startups to walk founders through every step of the funding process, offering not only credit but advice.
Wondering if there is a better way?
Golden Section is a great choice for founders who may not be as technologically savvy or founders who are looking for a partnership to help them excel.
debt funding companies
Venture Debt Funds List
When searching for the best venture debt funds, it’s important to keep the goals and scope of a startup in mind. Not every venture debt broker found in a venture debt funds list is going to be a fit for your startup. There are also pros and cons to be weighed when it comes to considering venture debt vs venture capital. If a startup hasn’t secured venture capital, it is unlikely that they should even be searching for venture debt at this point. In addition, the location of the startup also plays an important role. Outside of America, it can be difficult to access venture debt funds. Europe does have some venture debt providers and lenders, but European startups tend to focus more on revenue. American startups tend to focus more on growth. It’s also important to keep the venture debt market size in mind when searching for venture debt lenders.
Not all debt funding companies will service all types of industries. If possible, find a venture debt lender that specializes in your type of business. For example, Golden Section specializes in B2B SaaS companies. Golden Section was founded by founders, for founders, and provides specialized expert consulting services alongside funding. Rather than glean information from a venture debt ppt, Golden Section agents will examine a startup’s potential and then walk founders through a venture process, guiding them towards growth.