Types of Venture Debt
Venture debt is typically structured as one of three types:
- Growth capital: Typically term loans, used as equity round replacements, for M&A activity, milestone financing or working capital.
- Accounts receivable financing: borrowings against the accounts receivable item on the balance sheet.
- Equipment financing: loans for the purchase of equipment such as network infrastructure.
The venture lender effectively piggybacks on the due diligence done by the venture capital firm.
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