The Growing Use of Debt in Technology Companies
Technology companies are increasingly using Debt as a growth tool thereby enhancing equity value. While equity financing gets a lot of buzz, debt financing has been growing at a steady clip. Pitchbook notes US venture lending accounts for 10 to 15 percent of the total VC capital. Debt stepped in during the Pandemic allowing companies to borrow at cheaper rates than would likely be available for equity financing. We recently saw Internet companies like Airbnb, Eventbrite, Wayfair raise debt financing. In addition, subscription software is one of the most attractive and resilient business models of any industry making it a good fit for debt capital. A quick read on the growing use of Debt in Technology companies along with valuable insights from leading domestic and international industry practitioners from early stage debt providers to firms who are part of multi-billion dollar financing rounds.