Venture Debt Terms

Venture Loans are unique and highly customised instruments so loan terms vary widely, but here’s a flavour of what they are.

Size and shape

A Venture Loan is usually an amortising term loan, funded either in full or in tranches over time. We discuss the size and shape of the loan before we agree pricing — as the riskiness of the loan varies depending on size and shape.

  • Size: £2 million to £8 million
  • Duration: 36 to 60 months
  • Amortisation profile: Often including a 6-12 month interest only period, then an amortisation period of monthly capital and interest repayments
  • Tranching: Venture Loans can be funded in instalments to make their amounts more relevant to the company’s funding needs and minimise interest costs early in the loan
  • Collateral: secured on all or most assets
  • Covenants: 1 or 0 covenants.

Pricing

BOOST&Co and other Venture Debt funds expect returns of 12—25% through a combination of loan and equity returns.

  • Interest rate: 10-12% on capital outstanding
  • Fees: 1-2% of the loan amount
  • Equity kicker (this is typically a warrant): 10-20% of the amount lent.

Structure

Venture Debt structures are made up of three basic documents: a debt instrument, an equity kicker document and a security document.

  • These are standard documents across all such transactions, though they can vary across countries in Europe due to local legislation
  • Depending on the country where the loan is made, this basic structure may be adapted to fit with the relevant regulations
  • In the UK these are loans with debentures
  • In France Venture Loans are structured as OBSA (Obligations à Bons de Souscriptions d’Actions)
  • In Germany, Venture Loans are structured as bonds (Schuldverschreibung) with share options or sometimes fathom shares (Phantomaktien/virtuelle Aktienoptionen)

Venture Debt by BOOST&Co

The team at BOOST&Co has been crafting Venture Debt solutions for more than a dozen years. We have done more than a 150 Venture Debt transactions over that time.

If you want to discuss how we can work together to create a venture debt solution, get in touch with us. The best way is to give us a call, or to leave us some information about your business.