Venture Debt

MDV ‘THE PARTNER OF CHOICE FOR VENTURE-BACKED STARTUPS’

Venture financing is a range of financing products offered to early and growth-stage venture capital-backed companies who are otherwise unable to access credit firms.


In Malaysia, MDV provides term or revolving financing to VC-backed technology startups and growth companies that have undergone at least a Series A funding round.

WHY CHOOSE VENTURE FINANCING?

FUEL GROWTH

Provides essential growth capital

ENHANCE LIQUIDITY

Strengthens balance sheet and enhances liquidity

MAINTAIN SHAREHOLDING

Less equity dilution for entrepreneurs and investors

STRUCTURED CAPITAL

Achieves a more balanced and less costly capital structure

INCREASE VALUATION

Bridges to next round of financing at a potentially higher valuation

EXTEND RUNWAY

Extend cash runway to achieve the next milestone

WHEN TO RAISE VENTURE FINANCING?

With Equity Raise

Concurrent with or immediately following an equity round, where momentum is strong, due diligence materials are in-hand, and cash is in the bank, Venture debt can enhance percentage of the equity needs and minimise equity dilution.

Between Equity Rounds

Venture debt can extend the cash runway of a startup company to achieve the next milestone achievement prior to their next equity round, resulting in a higher valuation and less equity dilution.

Fund Large Capital Expenditures

Venture debt can help finance large capital expenditures without depleting the company’s cash balance.

As Standby funding facility

Venture debt can serve to protect the company from potential delays in developmental milestones or deferrals; eliminating the need for a bridge equity financing round and allowing the company to raise its next equity round once the company is on-track with its milestones.

Fund to Profitability

Venture debt can help a company reach profitability. It propels the company forward during a critical period of growth and able to eliminate the need for a final round of equity financing.

LET’S GET ACQUAINTED WITH VENTURE DEBT TERMS

FINANCING DURATION

Loan duration, or term, typically comprises 24-60 months and often includes a PROFIT-only period followed before capital payments start.

COVENANTS

Any covenants (financial or non-financial) which could trigger a default should be carefully considered. Venture debt funds typically provide more flexible capital with less covenants than commercial banks.

FINANCING PROFIT RATE

Financing rate, also referred to as run rate, will determine payments for profit-only and remuneration periods. Banks have a lower cost of capital and therefore provide lower rates than venture debt funds.

FINANCING SIZE

Financing size should be determined by the amount of capital required and the amount of debt desired by the business.

COLLATERAL

Collateral will be pledged as a security for repayment of the financing, and can include cash, inventory, company assets, or intellectual property.

WARRANTS

Many venture financiers request warrants to purchase company stock, typically calculated as a percentage of the financing amount.

WHY MDV?

MDV’s products are similar to banks and venture capital companies but with several key differences to accommodate our customers’ varying needs in each stage of development.

Our extensive technology portfolio is what sets MDV apart from other financial institutions. The expertise that we have developed and the experience that we have accumulated through funding more than 700 technology projects have enabled us to better understand our clients and to rapidly respond to market needs.

We also work closely with our customers to provide them with utmost value throughout the financing tenure, where we will offer our support during challenging periods.

We are committed towards understanding the project or contract structure, allowing us to provide a financing solution that meets your requirements

We have capable and dedicated professionals to engage with your team, from pre-application to project/contract delivery and operations

Our customers will be able to access our vast network and relationships with key industry stakeholders and participants

We have developed project and contract financing framework for efficient and effective assessment and structuring

MDV’s products are similar to banks and venture capital companies but with several key differences to accommodate our customers’ varying needs in each stage of development.

NOW LET'S GET STARTED


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