Covenants
What you promise to keep
Lenders may set minimum cash, revenue or performance tests. Breaching them can give the lender extra rights, so they need headroom.
- Minimum cash tests
- Revenue or growth tests
- Reporting obligations
Venture debt
More runway, less dilution.
Borrow to reach the next milestone on your terms.
Venture debt can fund growth between equity rounds or bridge a company to a sale. We introduce suitable lenders, compare their terms side by side and coordinate the process with your counsel.
- Time to hit the next milestone
- Runway
- Time to hit the next milestone
- Several lenders, one view
- Compared
- Several lenders, one view
- Founders keep more equity
- Control
- Founders keep more equity
Facility process
In review
- Use of funds agreedDone
- Lenders approachedDone
- Term sheets comparedLive
- Covenants negotiatedNext
- Lender diligenceNext
- Facility signedNext
Every term compared before you choose.
Why it matters
Equity is the most expensive money you raise. Debt can do some of the work.
For a software company with recurring revenue and strong investors, a debt facility can extend runway, fund an acquisition or carry the business to a sale, without pricing a new round. The right structure depends on what the money is for and how it will be repaid.
- Fund growth between equity rounds.
- Finance a bolt-on acquisition.
- Bridge to a planned sale or refinancing.
- Keep more of the company for founders and staff.
The terms that matter
Four things to understand before you sign.
Headline interest is only part of the cost. These terms decide how flexible the facility really is.
Warrants
The equity kicker
Many lenders take warrants, a right to buy a small amount of equity later. They lower the cash cost but add some dilution.
- Size of the warrant
- Strike price
- What happens on a sale
Repayment
How and when it is paid back
Interest-only periods, amortisation and prepayment fees shape cash flow. They matter most if you plan to sell or refinance early.
- Interest-only period
- Amortisation schedule
- Prepayment and exit fees
Security
What the lender holds
Facilities are usually secured on company assets, sometimes including IP. Understanding the security package protects later options.
- Asset and IP security
- Negative pledges
- Change-of-control terms
The process
From first call to signed facility.
A short, structured process puts several lenders in front of you so you can choose on terms, not on who called first.
Talk through your plans- 01
Purpose and size
Preparation
Agree what the money is for, how much is needed and how it will be repaid: growth, an acquisition or a bridge to exit.
OutputClear use of funds
- 02
Lender outreach
Marketing
We approach lenders suited to your stage and sector. They review information under NDA and send indicative terms.
OutputCompeting term sheets
- 03
Compare and negotiate
Selection
Terms are laid side by side, including covenants, warrants and fees. Your counsel negotiates the chosen term sheet.
OutputPreferred lender
- 04
Diligence and close
Close
The lender completes its review and the facility documents are agreed and signed with your lawyers.
OutputSigned facility
Options compared
Venture debt or a new equity round.
Both can be right. Many companies use them together.
Equity round
Venture debt
Dilution
Equity roundNew shares issued
Venture debtSmall, via warrants if any
Valuation
Equity roundPrice set for the company
Venture debtNo new valuation needed
Repayment
Equity roundNone
Venture debtRepaid over the term
Obligations
Equity roundInvestor rights
Venture debtCovenants and security
Bridge to exit
When debt carries a company to a sale.
A facility can give a business the time to run a proper sale process instead of selling under pressure. These points decide whether it helps.
| Question | Why it matters |
|---|---|
| Does the facility allow early repayment on a sale? | Prepayment and exit fees affect what founders receive. |
| What happens on a change of control? | Some facilities must be repaid in full when the company is sold. |
| How do warrants convert in a sale? | Warrants can take a share of the sale proceeds. |
| Is there covenant headroom during the process? | A sale can take months, and tests still apply. |
Acquiry does not lend or give legal, tax or credit advice. Lenders make their own credit decisions, and your lawyers and accountants advise on the facility. We introduce lenders and coordinate the process.
Confidential by default
Your numbers, shared with care.
Lenders see information under NDA and only once you are ready. Your existing investors stay informed at every step.
Every Acquiry mandate runs under strict NDA.
Questions
What founders and boards ask us.
What is venture debt?
It is a loan for venture-backed companies, often used alongside equity. It usually has a fixed term, interest, and sometimes warrants that give the lender a small right to equity.
Who is venture debt suited to?
Companies with strong investors, recurring revenue and a clear plan for how the money will be used and repaid. It is generally not a replacement for equity in very early companies.
What are covenants?
They are promises in the facility, such as keeping a minimum cash balance or reporting regularly. If they are broken, the lender may gain extra rights, so it is important to agree realistic levels.
Can venture debt help before a sale?
Yes. A bridge-to-exit facility can give a company time to run a proper sale process. The key is checking prepayment, change-of-control and warrant terms first.
Does Acquiry lend money?
No. Acquiry introduces lenders and coordinates the process. Lenders make their own credit decisions, and your lawyers and accountants advise on the documents.
Discuss a debt facility
Tell us what the money is for.
Share a few details and we will reply directly, usually the same working day. No financial documents are needed at this stage.
- Strict NDA before we see any document.
- Several lenders compared.
- No upfront fee.