When financing your start-up, you can choose between equity or non-dilutive funding. Within non-dilutive options, there is the Venture Loan. But what exactly is a Venture Loan?
Venture Loan: the definition
It is a loan agreement!
It is primarily aimed at start-ups that have already raised a significant amount of equity and are nearing profitability. In other words, those experiencing strong growth.
This cash can, for example, allow you to delay your next funding round and buy yourself some time. Even though interest rates have risen sharply and the current climate is challenging, it remains cheaper than giving up equity.
The different investors: Equity vs. Debt
A debt investor is different from an equity investor. An equity investor is looking for a unicorn to offset all the other losses in their portfolio.
A debt investor, on the other hand, wants to be repaid. No matter what. They have a contract with complex clauses that you need to understand inside out, because they will enforce that contract!
A debt investor is not flexible, and the smooth operation of the company matters little to them as long as you repay the debt. They will enforce the contract even if it puts the company in difficulty, unlike an equity investor who will try to find solutions to ensure a future return, as is the case with equity.
How do you go about getting a Venture Loan?
You should meet with several Venture Loan providers to create competition and choose the one that best fits your company. Just like with an equity round, you will need to hire a specialized lawyer because loan agreements are complex. And you must maintain the same level of transparency with the lender as you would with a VC fund.
Venture Loans have grown significantly in the US (Brex, etc.) and are starting to emerge in France.
And that’s great, because entrepreneurs really need them!
If you have any questions on the subject, we have a team dedicated to non-dilutive financing at
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