Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Growth startups can raise not only funding for equity but also funding for debt called venture debt.

Venture debt doesn’t dilute the founders and provides capital to continue the growth.

Here are some key terms and conditions to know when looking for venture debt:

There are term loans and revolving lines of credit with maturity dates and interest rates.

The lender will look to secure assets for the loan.  

Check to see if the intellectual property will be required.

If they do tie to the IP, then they will want a negative pledge in that they don’t want you to pledge the IP to any other lender.

Many lenders will require you to move all your banking to their firm.

If so, understand the account transfer period.

The amount of funding and timing is a key issue. Will the funds be transferred in one go or in tranches?

Check to see the requirements for each tranche.

Check for fees on early payoff and exits.

The default rate is the increase in the interest rate in case you default on the payments.

Finally, warrants are often part of the terms. A warrant is the right to buy stock at a specified price.  

What is the price of the warrant and what is the timeframe it is active?

Check for these key points in a discussion about venture debt.


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Music courtesy of Bensound

In this episode, Hall welcomes Ross Darwin, Principal at Owl Ventures.

Founded in 2014, Owl Ventures is the largest venture capital firm in the world focused on the education technology market with over $1.3 billion in assets under management. The Silicon Valley-based firm was purposely built to partner with and help scale the world’s leading education companies across the education spectrum including PreK-12, higher education, and the future of work (career mobility/professional learning). They invest in companies at all stages from early, growth, and later stages and across all geographies around the world.

Ross is an investor at Owl Ventures where he helps lead new investments and supports existing portfolio companies. His investments span across early childhood, K12, college, career, and lifelong learning and he has actively looked for areas where education intersects with other parts of the economy including areas like financial literacy and wellness.

Prior to receiving his MBA, Ross spent 3.5 years at TA Associates as an associate where he was active in deal sourcing, due diligence, deal execution, and portfolio support. Ross evaluated a number of opportunities in the education space and was an integral member of one of the major education deals that TA closed. Prior to TA Associates, Ross was an associate at The Parthenon Group, a consulting firm that specializes in education and private equity work. Ross worked on numerous client projects including a unique education assignment where he developed classification and intervention programs for CORE, the largest 8 school districts in California to seek US Department of Education approval for a custom program to replace the requirements of No Child Left Behind.

Ross has been an active volunteer in Bay Area schools, working with students in East Palo Alto through Math Magic, and in San Francisco through the Telegraph Hill Community Center. Ross is also an active mentor and former Board Member for the Peninsula College Fund, a bay area charity focused on supporting first-generation college students.

Ross graduated from Stanford University with honors of Phi Beta Kappa, Stanford Award of Excellence, and the Innovative Research Award. Ross received his M.B.A from Stanford Graduate School of Business.

Ross goes into great detail about the state of investing in education and how he sees the industry evolving. He discusses what he thinks will be the most significant change in the next 12 months and shares some of the challenges entrepreneurs and investors face.

You can visit Owl Ventures at www.owlvc.com, via LinkedIn at www.linkedin.com/company/3855155/, and via Twitter at https://twitter.com/owlvc?lang=en.  

Ross can be contacted via email at ross@owlvc.com, and via LinkedIn at www.linkedin.com/in/rossdarwin. 

Music courtesy of Bensound. 

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