more-arw search

Q&A Forum

Looking for current Venture Debt rates

We are pitching a few Venture Debt folks on a $500K tranche of debt. We are an early stage, Silicon Valley, venture-backed (~$1.5M raised so far from quality VCs), in revenue, internet company. I'm looking for current rates of interest (e.g. prime + X%), warrant coverage, and practice around security for the lender (e.g. assets, IP, etc.). Would greatly appreciate the help. Thanks.

Answers

Bryan Frey
Title: VP Finance/Corp Controller
Company:
(VP Finance/Corp Controller, ) |

The rates I got recently (slightly larger and further along company) were high single digits interest (prime + 6%, and prime is just over 3% now), facility fee of 2%, early termination fee of 3% and warrants a bit under 5%. This was for a $2.5M deal.

Jeff Taylor
Title: CFO
Company: Communications Co.
(CFO, Communications Co.) |

Recently my company had an unsolicited offer for some venture debt so we played it out to see what the deal was. 13% (prime plus 10%), facility fee of 2% AND a commitment fee of 5% (which would be put to the deal whether we pulled the money down or not), 5.5% warrants. All told, the economics were a 20% IRR, which was just too expensive. My prior venture debt deals that I considered "competitive" all came it between 11% and 14% IRR. Plus they had long interest-only periods, long take-down periods and no MAC clauses, so that you could get the money regardless of what your company looked like at the time. I mean, that's what venture debt is for anyway - to have when you are running short on capital and want to extend your runway.

Topic Expert
Joan Varrone
Title: CFO
Company: Cloud Cruiser
LinkedIn Profile
(CFO, Cloud Cruiser) |

One of the companies I consult for received a very attractive long term loan from SVB. To maintain confidentiality I cannot disclose the specific terms but they were more attractive than those mentioned above. This was for a pre revenue company that did not even have an alpha. The company had backing of a premier VC and the founder was a successful serial entrepreneur which I think was a big part of the commitment made.

2069 views
Topics

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.