Venture Debt
Venture debt is typically for early stage and emerging venture-backed companies that are looking to build out their business through infrastructure expansion or growth capital. Traditionally venture debt is used for the purchase of hardware and infrastructure equipment, enabling venture backed companies to reserve the equity capital investments for business critical activities such as research and development, marketing practices, and hiring. Additionally, venture debt can be used to finance inventory, and demonstration equipment and can be purely offered as growth capital. |
FAQ's
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Q. What is Eastward? What do they do? |
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For technology-focused venture capitalists, Eastward is a leading East Coast venture debt source. Through its regional focus and longstanding relationships, Eastward specializes in working with VC's to provide their portfolio companies with equity-sensitive financing solutions. CommVest, the predecessor to Eastward, was founded in 1994 and its current portfolio includes Airvana, Broadbus, Laurel Networks, Pirus Networks and Managed Storage.
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Q. What is venture debt? |
A.Venture debt funding provides emerging, venture backed companies with the additional capital needed for equipment and infrastructure build out, as well as expansion into new business markets. Venture debt traditionally follows closely to a round of venture capital funding, lengthening the intervals an emerging company needs to raise additional venture capital investments.
Venture debt is an attractive option for emerging companies, venture capitalists and for investors.
For emerging, venture-backed companies, venture debt reduces equity dilution by slowing the burn rate of the company’s cash reserves, lengthening the cycles it goes through in securing new and costly rounds of venture capital.
For the venture capitalists, venture debt leverages equity capital investments, providing stability to a VC’s portfolio by adding additional financial sources. In addition, venture debt augments equity returns through its lower capital costs.
For the investor, venture debt provides a hybrid alternative to a traditional venture capital fund, combining the predictability of fixed income with the potential returns of venture capital.
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Q. Who is venture debt for? |
| A. Venture debt is typically for early stage and emerging venture-backed companies that are looking to build out their business through infrastructure expansion or growth capital. Venture debt is traditionally used for the purchase of hardware and infrastructure equipment, enabling emerging companies to reserve the venture capital investments for business critical activities such as research and development, marketing practices, and hiring. Additionally, venture debt can be used to finance accounts receivables, inventory, demonstration equipment and can be purely offered as growth capital. |
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Q. How are Eastward’s venture debt investments different from other types of loans? |
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Eastward brings an equity-sensitive approach to each investment. Unlike other lenders, Eastward is able to creatively structure venture debt products that meet the needs of emerging companies. Eastward has the experience to evaluate and manage the risks associated with lending to emerging companies, something traditional lenders are unable to do. As a non-regulated, fund-based venture debt provider, Eastward does not require the financial covenant packages, cash collateralization and other protection required by most banks and other financial institutions. |
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Q. What venture debt products does Eastward offer? |
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Eastward offers a variety of equity-sensitive venture debt products, including lease financing, senior debt, subordinated debt and convertible debt. |
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Q. Is a round of venture debt appropriate for my company? |
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Eastward conducts extensive due diligence and requires potential portfolio companies to meet appropriate requirements to be eligible for a round of funding. Traditionally, Eastward invests in emerging companies that are developing technologies focused on solving real-world business issues. Technology attributes include:
- Providing demonstrable ROI through cost savings
- Providing clear interoperability with existing technology platforms
- Adding major features and functionality upgrades to existing technology
- Providing incremental scalable replacements for existing technologies
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Q. How much money does Eastward currently have under management? |
| A. Eastward currently has over $300 million in investments under management. |
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