Venture Debt Financing: Determinants of the Lending Decision
Venture debt lending is a form of start-up financing that lies at the intersection of venture capital and traditional debt. We analyze the lending decision criteria of 55 senior U.S. venture debt lenders (VDLs) using a discrete choice experiment in order to understand how VDLs overcome barriers that traditionally hamper start-ups’ access to debt. We find, first, that the provision of patents as collateral is as important as the provision of tangible assets to lenders. Second, VDLs showed a marked preference for start-ups that offered warrants. Third, venture capitalists' backing substitutes for a start-up's positive cash flows.
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De Rassenfosse, G., & Fischer, T. (2016). Venture Debt Financing: Determinants of the Lending Decision. Strategic Entrepreneurship Journal, 10(3), 235–256. https://doi.org/10.1002/sej.1220
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WOS:000385762100002
2016
10
3
235
256
NON-REVIEWED
EPFL