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He tells the story of how he was out of cash, stressed out, nobody in LA or Silicon Valley would give him money, he had finally found an investor in Minneapolis but his venture bank was going to shut him down for breaking a “covenant&# in their agreement by not having enough cash in the bank. The answer?
We hired a strong mid-market banker, Lightning Partners to help us with the process and got an introduction to Bending Spoons in April of 2024. The most important aspect of venture debt is to fully understand the covenants, essentially business operations collateral, to which you are agreeing. I cant emphasize this enough.
His entire income is based on his personal output and he’d like to hire several woodworkers, expand his sales to existing customers, and generate a profit in addition to his contributed labor. Appropriate covenants. Maybe Small Business Administration guaranteed loan. Appropriate covenants.
I’ve been a traditional equity VC for 8 years, and I’m now researching new businessmodels in venture capital. The mode purpose for funding is (in order of frequency) Sales, Marketing, Market Expansion, Product Development, and Hiring Employees. The average monthly operating expenses is $70,335.
The entrepreneurs did say that they wanted the business expertise of one of the sharks. But there are other ways that they could have gotten business expertise to complement their own skills. The most obvious one would be to hire somebody.
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