What do Google, Facebook, Uber, Airbnb and Dropbox have in common? In addition to their tremendous success, all have utilized venture debt to help fund their growth. Although most of the debt was raised when these companies were in the late-stage of development, at least some of them raised debt in their early stages. Western Technology Investment (WTI) provided debt to Google in conjunction with its Series A equity round. In addition, WTI provided venture debt to Facebook to purchase some of its first servers, in addition to providing debt in conjunction with Facebook's Series A equity round.
Estimates of the size of the venture debt market vary widely, ranging from $2 billion to $9 billion funded annually. Regardless of their size estimates, almost all observers agree that the venture debt market has grown rapidly in recent years, becoming a major source of non-dilutive or minimally dilutive funding.
The biggest surprise to us is that, despite the prevalence of venture debt, estimates of market size differ by more than 4x. The venture capital (equity) market is chronicled and measured in minute detail yet, despite billions of dollars invested each year, the venture debt market remains a relative backwater or an afterthought.
This realization piqued our curiosity and many subsequent nights and weekends were consumed with research, followed by email exchanges and telephone calls with lenders, CEOs and CFOs. All evidence led to the same conclusion:
“The venture debt market is hugely inefficient. There’s a need for more transparency”
– Partner at Venture Debt Fund
Shortly thereafter, we decided to launch Find Venture Debt.
The lack of complete and reliable information regarding the venture debt market leads to the following scenarios:
The first and second scenarios suggest that there’s potential for significant growth in the market. In the second and third scenarios, it’s likely the search process was unnecessarily time-consuming, or expensive if an advisor was hired.
We help technology and growth-focused companies:
We help venture debt lenders: