U.S. VC Ed Sim on venture debt benefits

Here is an excerpt from a Monday post about venture debt written by Ed Sim in his BeyondVC blog. Great to see him pick up (likely a coincidence) on our copyrighted “True Growth Capital” tagline:

“Why can raising venture debt be great? It is quite simple – the dollars are relatively cheap compared to an equity financing and extending your runway to hit more critical milestones means a potentially better valuation for your company down the road. And of course if you exit before raising another round, there are more dollars available for the equity holders. A typical structure for an early stage deal could be an equity raise of $3-5mm with another $1-2.5mm of debt. From a pricing and terms perspective, you should look for capital which is flexible in terms of use for true growth capital….”

“…[management teams] who are confident in their execution and ability to raise another round, there is no better way to stretch your dollars in the company and create more value with minimal dilution. So the next time you hear the word “debt,” don’t be scared and keep an open mind as you may be able to stretch your resources further and achieve some additional critical milestones driving increased value in your business.”

Couldn’t agree more, Ed!

MRM