Startup companies backed by minimum one well-reputed venture capital fund. Please note that even prominent business angels or corporate investors do not suffice in this aspect. Companies with a SaaS-focused business model is preferred.

Though taking on debt can be a risky affair, debt also has some advantages. Accordingly, a venture debt-facility will:

• enable the company (and its investors) to get a longer “runway” before its next equity round, and thereby give the company a higher degree of certainty of reaching their next value peak;
• only dilute the founders (and the other investors) very little; and
• allow the company’s investors to leverage their investment.

Experience

Vækstfonden’s venture debt-product was launched in the beginning of 2018.

How much do they invest?

Minimum 2m EUR/USD (or equivalent in DKK).

Typical main terms:

• Interest rate: 9-14%
• Loan term: 3-5 years
• Warrant coverage: Approx. 10% of the facility (i.e. a 2m USD loan facility will allow Vækstfonden to subscribe for shares in the company of 200.000 USD to the most recent valuation).

How do they work?

In order for Vækstfonden to be able to provide a venture debt loan facility, Vækstfonden inter alia needs to:

• carry out a financial due diligence of the company’s budget model, its underlying assumptions and the KPI’s in the budget model;
• assess the quality of the company’s investors, i.e. the venture fund(s) who have already invested in the company; and
• carry out a minor legal due diligence.

External counsel (financial consultants and lawyers) are typically engaged on the account of the company. The total process (from inquiry to disbursement of the loan) is estimated to 4-6 weeks.

The process is subject to standard credit committee approval (internally in Vækstfonden).

This makes a difference to them

i) The quality of the venture capital fund who has invested in the company

ii) The company’s performance in relation to the metrics/KPI’s set out by the venture capital fund (as this will impact the likelihood of future equity investments by other venture funds)

Key People

Kim Lundberg - Senior Relationship Manager at Vækstfonden Venture Debt
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Signe Marcussen - Senior Relationship Manager at Vækstfonden Venture Debt
LinkedIn

Alexander Kielland - Project Manager at Vækstfonden Venture Debt
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