ABSTRACT

One fundamental, long-standing pattern in the funding of early-stage companies has been the use of equity-style investments by venture capitalists (VCs). As a result, the perception has been that debt contracts are a negligible component of the funding picture for VC-backed companies. This is often justified with the observation that startups do not feature the characteristics that traditionally support debt financing, such as significant free cash flow, tangible collateral, or reputation.

AUTHOR

Juanita Gonzalez-Uribe and William Mann