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Raising a Round? Here’s How Not to Get Diluted

It seems that whenever we talk about venture capital financing, we forget that there are more investment types than equity financing. Venture debt, on the other hand, rarely gets mentioned or discussed, even though it can provide valuable options to entrepreneurs in terms of choice.

 Unlike equity financing, venture debt does not incur a stake in company’s value – it most often functions just as a normal debt provided by institutional investors. On one hand, it’s understandable why venture debt is so rare – angels and VCs don’t just want to go for interest rates, they want to get a slice of returns. So we are left with institutional investors providing this crucial instrument to only select companies, yet only a handful of banks have dared to look into possibilities of providing venture debt (most deem it too risky and can’t properly valuate startups). One of those institutional investors and perhaps the flagship bank for venture capitalist is Silicon Valley Bank (SVB). Startup Istanbul, leading ecosystem event in the region, welcomed Andrew Tsao and Vera Shokina, managing directors of Silicon Valley Bank Global Gateway department.

Check out their full speech and Q&A session, where Andrew and Vera discuss the mission of SVB, how it came about why does it focus on emerging markets. If you haven’t heard of venture debt, this is a must-watch: it will help you understand the role of venture debt, how to raise one and what are its advantages and challenges over equity financing instruments.

https://vimeo.com/143227891]]>

─ April 1, 2016