Venture lending gives startup companies new choices in financing.
Not only do you have a new avenue for finding financing, you have dozens
of new companies bursting with money -- just waiting for your business
plan
!
Well, it's a little more complicated than
that. But it is a whole lot easier than traditional venture capital
investment. Venture lending is the hybrid that makes venture capital
firms compete for your business.
Companies like SVB Financial Group,
Lighthouse Capital Partners, Hercules Technology Growth Capital, Inc. and
Pinnacle Venture are ready with $500,000 to $10 million loans for new and
emerging companies. These are loans, not investments.
There are some strong advantages and
disadvantages to this new funding source.
Most importantly, as a loan, they must be
repaid. There is a Due Date for every single loan. While most
companies believe they can meet that due date, most companies miscalculate
just how strong they will be on the due date, leaving the door wide open
for greedy investors.
On the plus side, the venture lending
companies do indeed make traditional venture capital firms compete.
When a solid company goes shopping for funding, there is no doubt at all
that the mere presence of one of the venture lending companies throws a
big monkey wrench into negotiations.
Use this to your advantage. Whether
or not you ultimately opt for a venture loan, talk to them. Find out
what all your options.
And just drop a hint to venture capital
companies that there is a venture lending company in your future.
