Venture Debt: The Alternative to Equity with James Turner of 5th Line Capital

<p>Many early-stage companies leverage equity when fundraising after considering certain risk profiles and limited liability to the founders. Though, in unique and more regularly-occurring situations, there are other options to consider. If you’re looking for capital but don’t want to raise equity, James Turner of 5th Line Capital recommends looking to venture debt instead. </p><p>Venture debt is a type of debt financing for venture-backed companies that helps them fund their businesses without diluting capital through an equity raise. While some venture debt has a higher interest rate than a bank like SVB, it likely won't be as expensive as the equity. In this episode of The Modern CFO, James explains the mechanics of venture debt, when to use it, and how to be more strategic overall with your capital.</p><p><strong>Show Links</strong></p><ul> <li>Check out<a href="https://www.5thline.co/"> 5th Line Capital</a> </li> <li>Connect with James Turner on<a href="https://www.linkedin.com/in/jamesturner-63109490/"> LinkedIn</a> </li> <li>Check out<a href="https://www.nthround.com/"> Nth Round</a> </li> <li>Connect with Andrew Seski on<a href="https://www.linkedin.com/in/andrew-seski-819b2581/"> LinkedIn</a> </li> </ul><p><strong>Key Takeaways<br></strong><br></p><p><strong>5:54 – The best time to raise venture debt<br></strong>Knowing when to raise venture debt can be a challenge. The best opportunity for companies is when they’re in between major equity events.</p><em>“If you're a CFO and you're not one hundred percent well versed in a venture debt market, or this isn't something that you've done very recently, that can mean 30-40 names you have to shoot a ton of emails to. You have to disclose all your documentation, [and] make a bunch of phone calls to handle preliminary diligence processes. A good chance for them all to come back and say, “No.” So, I'd say the opportunity that we've identified as a result is that we know who fits where. It used to be, if you were a SaaS company, and you raised money from a