Venture debt financing

At Browne Jacobson, we understand that securing funding for high-growth businesses can be a major challenge for founders and management teams. As equity financing becomes increasingly difficult to obtain in today's volatile global funding market, particularly where venture capital valuations are not meeting expectations, there has been a drop in the amount of traditional venture capital funds being injected into innovative tech businesses.

Venture debt is increasingly proving to be a popular choice for venture capital-backed companies. It provides a valuable alternative to traditional equity financing (which involves selling ownership stakes in the company) and can also provide a unique funding option that complements equity investment.

What is venture debt?

Venture debt is provided by banks or other alternative funders, with specialism in this sector, to growth-stage companies that have already secured the backing of institutional venture capitalist investors. Venture debt providers focus more on the future potential of a business as opposed to its current outlook, diverging from the conventional approach of a more traditional bank loan. This makes it an appealing choice for early stage high-growth companies who are seeking to bridge the gap between equity rounds or simply require funding to expand their operations. Funders may also take a warrant as an equity “kicker” to offset their credit risk.

How we can help

Our venture debt team has been increasingly active and has extensive experience in advising both venture debt funders and companies on all stages of venture debt transactions. Our team works closely with our venture capital specialists, who have vast experience of advising on equity funding rounds for the tech businesses of tomorrow. We guide our clients through the entire transaction and advise on the full suite of documentation, including offer letters and terms sheets, loan documentation, security packages, equity warrants, shareholder agreements, and articles of association. Our team of specialist lawyers across the firm also supports on legal due diligence and disclosure for both borrower and lender clients.

Our financial services regulatory team advises on FCA matters for borrower and lender clients operating in regulated sectors to ensure compliance with regulation. With our expertise and support, our clients can explore alternative funding models with little or no dilutive impact on the equity cap table. Let us help you secure the funding you need to take your business to the next level.

International

At Browne Jacobson, we believe that connection is strength. Our approach to international work for our clients is no exception.

With 40% of our corporate transactions annually being cross-border, our model is flexible and agile. We work with a network of legal experts that we know work like we do, pragmatic organisations that are focussed on the right outcomes for our clients. This approach allows us to leverage regional specialisms from world-class law firms in all major jurisdictions.