How Venture Debt Benefits a Capital Structure

Venture debt benefits a company’s capital structure first and foremost by having saving dilution for the team. And what that means is at the exit for the company the entrepreneurs–the guys who are working the really late hours and doing all the hard work–those guys will have more money in their pockets if they use venture debt than if they don’t.

It’s a very patient source of capital on a company’s balance sheet. It’s not generally subject to material adverse change language or covenant defaults like you would find in a bank, so it’s patient capital, it does have to be repaid but properly used it’ll save the people doing the work– the management team working late hours—money, and they’ll be personally more wealthy at the exit than if they don’t use it.

Meet Tim O’Loughlin, Eastward Capital Partners Investment Partner.

Back to the Venture Debt Blog

This is not an offer to sell, or a solicitation of an offer to purchase an interest(s) in any fund managed by Eastward Capital Partners, LLC (“Eastward”). Such an offer will be made only by an Offering Memorandum, a copy of which is available to qualifying potential investors upon request. This material is not financial advice or an offer to sell any product. Eastward is a registered investment adviser. Registration does not imply a certain level of skill or training. More information about Eastward including its advisory services and fee schedule can be found in Form ADV Part 2 which is available upon request.