Buzz Archive:
Venture-Debt Financing is not Anti-Entrepreneur

by John E. Richards of Brigham Young University, 9/11/2007

It is common for entrepreneurs to offer to their investors preferred stock in their new ventures to raise capital. Preferred stock terms have strong protection for investors and in the end no debt is put on the company.

Venture debt is another form of financing companies. The investors loan money to the company instead of buying an ownership stake. This form of security is seeing an increasing use among venture-backed companies. But what are the ramifications? Read a brief overview of venture debt by John E. Richards of Brigham Young University and comment in our blog (all responses to be posted in the next Buzz).