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.


Published in:
Strategic Entrepreneurship Journal, 10, 3, 235-256
Year:
2016
Publisher:
Hoboken, Wiley-Blackwell
ISSN:
1932-4391
Keywords:
Laboratories:




 Record created 2016-06-23, last modified 2018-03-17


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