William Mann, UCLA Anderson
William Mann, UCLA Anderson
New Evidence on Venture Loans
New Evidence on Venture Loans
15 Nov 20171:30 PM – 3:00 PM
Open to public
Location:
Baker Library | Bloomberg Center 101
Organizer:
We show that venture debt, a growing segment of venture capital, confers flexibility in the timing of equity raising. In the Preqin database, we show that venture debt constitutes 15% of total venture capital since 2010, most of it coming between the Series A and D rounds. Using novel contract-level data on venture loans, we further show that debt is repaid quickly out of subsequent equity rounds; that default is rare, while prepayment risk is large; and that intellectual property collateral and warrant coverage are prevalent features. Our findings support narratives that venture debt avoids dilution and “extends the runway.”