UMTB Tech Venture Lending

Venture lending is a financing solution for technology-focused, venture-equity backed companies, with projected growth and value creation potential. Companies of this nature may lack the assets or the financial profile for traditional debt financing, and are looking for liquidity to achieve their growth ambitions.

Companies can use venture lending to:

• Bridge to the next round of equity or to profitability
• Complement an equity financing round
• Finance acquisitions, mergers and other growth strategies

Venture lending complements equity financing and is generally structured as a senior secured, three-year-term loan with warrants taken as an equity kicker.

Compared to equity financing, venture lending results in less dilution for the founders and investors, and is less expensive in the long run. This keeps the company’s management team highly motivated and also complements the equity capital. A venture lending facility can generally be arranged more rapidly than an equity financing round, allowing companies to focus on growth.

• Accumulated revenue of $3mm over the last 2 years and a strong growth projection
• Minimum equity raised of $4mm
• Diverse base of quality customers
• Business plan inclusive of the venture lending facility reflects future profitability

• Term loans generally up to $6mm with additional debt available via traditional AR or MRR-based structures
• Up to a three-year term with an option of a six-month interest-only period
• Warrant equity kicker reflecting the risk profile of the business
• Secured by a floating lien on all assets of the company
• Cash coverage requirement to ensure a minimum level of liquidity in the business