Our latest periodic table is below, with tongue in cheek of course. The table highlights lenders focused on pre-profit growth companies / enterprise value underwriting. This includes technology, consumer growth, and life sciences focused lenders.
These lenders generally lean in based on:
1. Momentum and quality of revenue stream (main factors include growth, scale, visibility, and underlying unit economics); and/or
2. A freshly priced equity round: while banks have historically dominated this use case, bank market disruption, drying up of new equity rounds, and higher interest rates have led to a marked slowdown here.
The Periodic Table of Growth & Venture Lenders
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Spinta Insights
The total number of lenders increased slightly from 2021 (214 vs 194).
While the total number appears stable, digging in reveals significant turnover and a flight to quality.
43 lenders exited the market
Main reasons: merged with another lender, fled venture for seemingly safer strategies, or regrettably no longer exist
Seven of the 43 were banks
On the flip side, we have 63 new venture lenders in our table
That falls to 50 if you adjust for the 13 Heartthrobs (exclusively focused on life sciences), since this is a new category in our table;
11 are banks, despite last year’s venture bank implosion
Reduced risk appetite
Institutionalists increased from 36 to 46 (require VC support)
SaaS Addicts increased from 41 to 58 (enterprise SaaS is the easiest business model to prove visibility with high profit margins)
New Elemental Family #1 – Mavericks
Taking a cue from the box office, we’ve phased out X-Men for Mavericks.
X-Men, who have their roots in the cash flow market and normally seek an imminent path to profitability, aren’t as unique as when they first were checking out the venture market years ago.
Conversely, Mavericks, those comfortable with high burn borrowers, are now the minority and often grew up in the venture debt market (or at least their founders did).
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New Elemental Family #2 – Energizers
Markets adapt, and the venture debt market is no exception.
With the upheaval in the equity markets over the last two years (and the resulting valuation declines), avoiding a down round is at the forefront for many growth companies.
Consequently we’re seeing more lenders offer a structured equity solution in addition to or in lieu of a traditional loan, dubbed here as Energizers. This option is typically reserved for companies with significant enterprise value and scale.
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