Demand for debt remains strong, interest in
non-bank specialty lenders is on the rise, and lender reputation
has become increasingly important following the collapse of Silicon
Valley Bank.
MENLO
PARK, Calif., Jan. 25,
2024 /PRNewswire/ -- Runway Growth Capital LLC
("Runway"), a leading provider of growth loans to both venture and
non-venture-backed companies seeking an alternative to raising
equity, today announced the findings from its third Venture Debt
Review. Produced in partnership with Sage Outcomes, the survey
gauges the current market perceptions of venture debt financing,
and explores how the collapse of Silicon Valley Bank ("SVB") in
March 2023 has shaped the views of
both capital seekers and capital providers.
Key findings from the survey include the following:
- 88% of Venture Capital ("VC") respondents reported their
portfolio companies plan to pursue venture debt in the next 12-18
months;
- A third (33%) of entrepreneurs stated that in their opinion,
venture banks have become less trustworthy since the collapse
of SVB;
- 23% of VCs felt that venture banks have become less trustworthy
following the collapse of SVB;
- 67% of entrepreneurs stated that they were willing to raise
venture debt with a non-bank or specialty finance lender.
Though misperceptions about venture debt persist (as they have
historically), the collapse of Silicon Valley Bank seemingly did
not affect demand for venture debt or its outlook in the months
ahead. Yet, lender reputation has become increasingly important and
participants indicated a heightened interest in non-bank specialty
lenders.
"Despite facing unprecedented disruptions like the collapse of
Silicon Valley Bank – a shockwave that many thought might dampen
enthusiasm for our industry – the demand for venture debt remains
strong," said David Spreng, Founder,
Chairman, and Chief Executive Officer of Runway. "More so, it's
evident that, in the current climate, lender reputation holds
significant weight. As non-bank specialty lenders rise in
prominence, we are reminded that educating our community about the
nuances of venture debt is paramount."
Venture debt was at the forefront of conversation during the
nation's banking issues last year, which brought to light several
misconceptions surrounding the difference between early-stage and
late-stage lending.
"Venture debt comes in many forms," Spreng added. "Early-stage
venture debt is very different from late-stage growth lending.
Early-stage is much more dependent on the financial backing of the
company and its equity partners' willingness to continue providing
funding. Late-stage, however, looks more closely at the company's
fundamentals – including its financials and path to profitability.
Success in venture debt also depends closely on the types of
businesses using it, the industries they are in, as well as their
ability to repay the loan."
Methodology
An online survey was conducted in
partnership with Sage Outcomes, between
April 10th and June 6th, 2023 to understand the current
market perceptions of venture debt financing, and how the collapse
of Silicon Valley Bank in March 2023
has shaped the views of both capital seekers and capital providers.
The study was conducted among entrepreneurs seed series and beyond
(within technology, life sciences, and consumer sectors) and
venture providers. Respondents were recruited from PitchBook and
Runway Growth Capital's online network.
118 complete responses were collected from the entrepreneur and
venture capitalist audiences. Following the survey, 5 subject
matter experts within the Runway Growth Capital network were
invited to participate in an online in-depth interview to provide a
more qualitative perspective to the findings.
About Runway Growth Capital LLC
Runway Growth Capital
LLC is the investment advisor to investment funds, including Runway
Growth Finance Corp. (Nasdaq: RWAY), a business development
company, and other private funds, which are lenders of growth
capital to companies seeking an alternative to raising equity. Led
by industry veteran David Spreng,
these funds provide senior term loans of $10
million to $100 million to
fast-growing companies based in the
United States and Canada.
For more information on Runway Growth Capital LLC and its platform,
please visit our website at www.runwaygrowth.com.
Forward-Looking Statements
Statements
included herein may constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Statements other than statements of historical facts included
in this press release may constitute forward-looking statements and
are not guarantees of future performance, condition, or results and
involve a number of risks and uncertainties. Actual results may
differ materially from those in the forward-looking statements as a
result of a number of factors, including those described from time
to time in Runway Growth's filings with the Securities and Exchange
Commission. Runway Growth undertakes no duty to update any
forward-looking statement made herein. All forward-looking
statements speak only as of the date of this press release.
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SOURCE Runway Growth Capital LLC