Venture Debt

A SMART COMPLEMENT TO EQUITY FINANCING

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WHAT IS VENTURE DEBT?

Venture debt, also known as venture lending, is a smart source of debt financing for early stage, venture capital-backed companies experiencing rapid growth. Venture debt makes venture capital more efficient by leveraging the existing equity investment in a startup company and providing the capital and runway to achieve its growth plans. As a complement to equity financing, venture debt financing enables a startup to achieve its next major milestone and increase its company valuation while reducing or delaying the need for additional equity. When structured appropriately, venture debt provides a more balanced capital structure and minimizes equity dilution for employees and investors.

THE VALUE OF VENTURE DEBT

The ideal time for a startup company to raise a large round of equity is immediately following a significant milestone achievement which increases the valuation of the company. Venture debt leverages the existing equity investment and bridges the company to the next valuation event.

BENEFITS OF VENTURE DEBT

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FUEL
GROWTH

Provide growth capital with minimal equity dilution
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EXTEND
RUNWAY

Extend cash runway to achieve the next milestone
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INCREASE
VALUATION

Bridges to next round of financing at a higher valuation
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ENHANCE
LIQUIDITY

Strengthens balance sheet and enhances liquidity
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STRUCTURED
CAPITAL

Achieves a more balanced and less costly capital structure
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SUBORDINATED
DEBT

Can be subordinated with senior bank debt

Trinity’s growth capital was a smart debt option for us. In addition to minimizing equity dilution, the process was easier and materially less complicated than equity financings I have experienced in the past. We are looking forward to having Trinity as a valued financial partner.

Andy Greenawalt, Founder & CEO Continuity

TYPES OF VENTURE DEBT

*EQUIPMENT LEASE

Financing for specific assets, secured by the assets themselves.

*TERM LOAN

Financing for general corporate and operational expenses.

LINE OF CREDIT

A credit facility secured by cash, accounts receivable and/or inventory.

*SUBORDINATED DEBT

Term debt that is subordinate to (behind) a senior lender.

CONVERTIBLE DEBT

Debt that will convert into equity after a future date or event.

BRIDGE/M&A FINANCING

Debt (typically convertible) that is intended to bridge to a larger equity raise or M&A event.

*Provided by Trinity Capital Investment

Trinity Capital Investment provides equipment lease financing as well as senior and subordinated venture loans to the portfolio companies of top-tier venture capital firms and technology bank lenders. We have subordination and inter-creditor agreements in place with all of the tech banks and can provide subordinated debt that is incremental to an existing senior debt facility. We are known for being organized, efficient, and a valued partner long after the transaction is closed.

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FINANCING WITH VENTURE DEBT

Venture capital is typically the first source of institutional financing for high-growth startup companies. With strong venture capital investors, a technology bank lender will typically provide a term loan and/or receivables financing. Venture debt from Trinity Capital Investment compliments both forms of financing and provides significant value to startup companies, venture capital firms, and technology bank lenders.

STARTUP COMPANIES

Startup companies receive growth capital with minimal cost to the business and the added benefit of raising their next round of financing at a higher valuation, resulting in minimal equity dilution.

VENTURE CAPITAL FIRMS

Venture capital investors benefit by maintaining their pro rata ownership in their portfolio company at less cost and bridging to the next key milestone without additional equity funds.

TECHNOLOGY BANK LENDERS

Venture debt can be subordinated behind a senior technology bank lender and strengthens the balance sheet of their portfolio companies.

Phone: (480)374-5350 | Fax: (480) 247-5099

2121 W. Chandler Blvd Suite 103 | Chandler, AZ 85224

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