Venture Debt Becomes Newest Asset Class Available to Investors on Percent’s Debt Marketplace that Unites the Three Sides of Private Credit Transactions — Borrowers, Underwriters, and Investors
Percent, the platform powering the future of private markets, announces the launch of Corporate Loans, which offers VC-backed startups a fast and seamless way to tap minimally-dilutive venture debt financing options – amid a slowing pace in growth-stage VC equity rounds. Through its proprietary holistic algorithm, Percent’s platform can provide startups with more capital upfront, compared to tapping into their existing ARR. Corporate loans are a new asset class being brought to Percent’s industry leading platform, opening up venture debt opportunities to accredited investors for the first time.
Venture debt is a $150 billion+ market filled with high-growth venture equity-backed companies. Before now, private companies looking for debt financing options to extend their runway were stuck in an unstandardized and “who you know” deal flow environment. This new asset class on Percent will be a game-changer for early-stage, VC-backed companies that have a big vision and demonstrable traction but still need growth financing to continue to achieve KPIs and execute on their roadmap. The launch comes at a critical time for the venture ecosystem amid a slowdown in VC funding. According to data from CB Insights, global funding fell 19% to $144 billion in the first three months of 2022, compared to last quarter, the largest quarter-over-quarter percentage decline in nearly 10 years.
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“We built this product for fast-growing, VC-backed companies like Percent, to provide other industry innovators and disruptors easy access to debt financing alternatives that don’t take a big chunk of ownership away from founders or shareholders,” said Nelson Chu, Founder and CEO of Percent. “In addition to launching this product, we are also its earliest adopters – having raised more than $7 million in debt capital on our platform in March which has been instrumental in helping us expand our market presence and accelerate our product roadmap. Given the market conditions and overall economic environment, we believe the timing is perfect for this offering, which can enable a company to continue meeting customer demand while in between financing rounds, which have been slowing.”
KEY BENEFITS FOR VC-BACKED STARTUPS
- Price discovery:Â Startups can raise capital based on current market conditions from Percent’s diversified investor base.
- Minimally dilutive. Companies don’t have to sign away much ownership as part of the deal.
- Shorter-term. Shorter terms are available compared to what is typically offered by venture debt funds alongside a transparent market to continuously refinance.
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KEY BENEFITS FOR INVESTORS
- High-yielding, short-term investment opportunities to diversify a portfolio. Low minimums and fees.
- Investments typically last until companies raise their next equity round, which afford investors shorter terms. Higher default risk is compensated by higher yields.
- Access to investments in the businesses shaping our future.
“We at Percent believe a thriving, transparent market can help other innovative businesses like us raise the growth capital they need and simultaneously provide existing debt providers a profitable channel to source and syndicate deal flow with ease,” said Prath Reddy, President of Percent. “As always, our market-based pricing, credit transparency, deal standardization, and unrivaled customer support — the hallmarks of our private debt marketplace — are standard with Corporate Loans.”
In the current environment of slowing VC-funding and rising interest rates, Percent believes it is an opportune time to offer venture debt as an asset class and product line. This launch is the next step in Percent’s ongoing transformation of private credit markets, as the fintech innovator is bringing public market standards and efficiencies to this legacy market.
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