Early this year, Silicon Valley Bank detailed in an article the composition of venture debt in the various series of fund-raising. One of the salient points raised is that venture debt comprised 47.4% in Series A stage. As highlighted earlier, founders need to consider venture debt as part of their toolbox in raising the necessary funds for development. Venture debt will extend the proverbial runway and increase valuation before raising the next round.
In a typical venture debt structure, Malaysia Debt Ventures will deploy warrant cover for our loans or financing with exercise or strike prices based on the last round. Financing limits are generally sized 25% of the equity round, while tenures are between 3-5 years. Profit or financing rates imposed are ECOF plus spreads from 3.5%.
Given the loan tenure, MDV has the flexibility to structure principal moratoriums for the initial period and step up payments to match cashflows of startups.
-Nizam Mohamed Nadzri, CEO