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Venture
Capital > This page
Venture Capital versus Debt Financing
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Venture Capital
|
Debt Financing
|
| Objective |
Realise
'market' investment returns |
Regular
interest & principal payments |
| Holding
Period |
Long
term |
Short/medium
term |
| Instruments |
Common
& preference shares,
convertible warrants, options |
Loans,
factoring, installment plans |
| Collateral |
No |
Yes |
| Pricing |
Earnings
multiple, NTA |
Interest
spread |
| Impact
on Balance Sheet |
Reduce
leverage |
Increase
leverage |
| Impact
on Cash-Flow |
Cash
sourced from the market |
Cash
sourced from the borrower |
| Impact
on P & L |
Below
the line |
Above
the line |
| Exit
Mechanism |
Listing,
buy-back, sale to 3rd parties |
Loan
repayments |
Recommended further reading:
Venture Funding Procedure
Guide To Writing A Business Plan
Is VC good for Your Business?
Learn About Capital Sources
Frequently Asked Questions
Preliminary
submission for Venture Capital
Business Plan information and resources
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