Venture Debt

Adair Morse

No 32183, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The provision of venture debt financing to growth-oriented startups which are backed by venture capital (VC) equity has been a bit of a puzzle given the lack of positive cash flows or traditional collateral of such startups. This short paper lays out the hurdles for debt to overcome to be a viable source of finance and casts the three types of venture debt – patent loans, venture leverage, and bridge loans – as solutions to such hurdles, casting the literature in terms of financial innovation. Finally, the paper addresses the risks implied by venture debt and discusses whether the demise of Silicon Valley Bank speaks to whether innovation ecosystem risk transmutes to the financial system through debt and the extent to which innovation ecosystem risk remains unstudied.

JEL-codes: G24 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-ent and nep-sbm
Note: CF PR
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