Venture Debt: World's First Periodic Table

As we’ve discussed in the past, the marketplace for emerging growth lenders is surprisingly fragmented and diverse. Bite sizes, sector focus, business model criteria, structuring philosophies, covenants (or lack thereof), and equity sponsorship requirements vary greatly across the landscape.

With tongue in cheek, we’ve distilled this down to the world's first “Periodic Table of Emerging Growth Lenders.” The main chart is below, with several subsets broken out in subsequent charts.

Perhaps an antidote for insomnia for some, we find the variety and shifting sands within the marketplace particularly interesting. Understanding these dynamics can offer valuable insight for growing companies and their investors when raising new capital.

The Periodic Table of Emerging Growth Lenders

Serving emerging borrowers that are pre-profit or have clear path to profitability; excludes life sciences / biotech focused lenders

Subset #1

Firms Entering and Exiting: Shifting Sands

Most new entrant activity has been taking place at the smallest and largest bite sizes - a barbell effect driven by lenders now serving the proliferation of small bootstrapped (but creditworthy) SaaS companies and, on the other end of the spectrum, companies staying private longer.

Subset #2

Equity Backing: VC not Required

While institutional equity backing is not an investment requirement for most lenders, pricing tends to be higher, availability lower, and covenants tighter. While many of these "Wild Catters" certainly become more cautious with no other institutional support, others stake their reputation on underwriting business fundamentals.

Subset #3

Structuring Dynamics: To Amortize, or not to Amortize

A relatively new concept to the world of venture growth debt is the non-amortizing bullet structure. While most lenders don't utilize this structure, it can be attractive for well-established companies seeking patient capital to obviate or complement later stage equity rounds.

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