![]() ![]() ![]() Venture debt lenders expect returns of 12–25% on their capital which is achieved through a combination of loan interest and capital appreciation of warrants. Since most startups tap into venture debt to augment equity, the size of the venture debt industry follows the movement of the VC industry. They universally will provide capital to companies still in a money loss mode, with variances around comfort on timelines to breakeven, next round of capital, recently raised equity, etc. ![]() As a rule, they all prefer better branded VCs backing any potential portfolio company - some are more militant about this than others. There are several philosophies behind the various players. However, not all VC-backed companies receive venture debt, and a study has recently estimated that lenders provide one venture debt dollar for every seven venture capital dollar invested. This would imply around $9B potential debt market. The VC industry invested around $27B in the last 12 months.
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