Unlike traditional bank lending, venture debt is available to startups and growth companies that do not have positive cash flows or significant assets to give as collateral.
Venture debt providers combine their loans with warrants, or rights to purchase equity, to compensate for the higher risk of default, although this is not always the case.
Debt lines from the banks start as low as $100,000 and for appropriately backed and/or companies with scale, can reach into the tens of millions in terms of facility sizes.
Specialty finance firms ("venture debt funds") Many independent non-banking lenders have emerged over the years in USA, Europe and Asia.
As a rule, they all prefer better branded VCs backing any potential portfolio company - some are more militant about this than others.