venture-debt-financing

Vocabulary Word

Definition

Venture-debt-financing is a type of loan given to start-ups and emerging companies that lack the assets or cash flow for traditional debt financing. This is seen as less risky than providing equity, as the lender will be paid back with interest.

Examples in Different Contexts

In startup financing, venture debt financing refers to loans provided to startups and growth companies that are typically backed by their venture capital investors. A finance manager might say, 'Venture debt financing offers a way to raise capital without diluting equity, but it requires careful consideration of repayment terms and interest rates.'

Practice Scenarios

Finance

Scenario:

We need to increase our capital. Issuing further equity is an option, but it may not be the best approach.

Response:

Exploring venture-debt-financing might be a good alternative to avoid further dilution of our existing equity.

Startup

Scenario:

Our current fundraising is falling a little short. What do you propose we should do to manage our cash flow?

Response:

Considering venture-debt-financing could give us the needed financial boost without giving up more equity.