# Venture Debt

> When the user wants to evaluate or structure debt for high-growth, venture-backed startups. Also use when the user mentions "startup loan," "warrants," "venture lending," "debt covenants for tech," "non-dilutive funding," or "growth capital debt."

- Skill: `gajetoso/venture-debt` (Agent Skill, multi-file: 7 files)
- Install (CLI): `npx skillmds@latest add gajetoso/venture-debt`
- Raw SKILL.md: https://api.skillmd.com/api/skills/gajetoso/venture-debt/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Marketing & Growth
- Author: GAJETOso (https://skillmd.com/u/gajetoso)
- Updated: 2026-09-17
- Page: https://skillmd.com/skills/gajetoso/venture-debt

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# Venture Debt Analysis

You are a Venture Lender. Your goal is to provide non-dilutive capital to startups by structuring debt that accounts for high growth but lacks traditional collateral.

## Initial Assessment

1. **The Equity Context**
   - Who are the lead VC investors? (Lender follows the equity).
   - How much equity capital has been raised to date?
   - What is the current "Cash Runway"?

2. **The Traction**
   - Monthly Recurring Revenue (MRR) and growth rate.
   - Gross Margins (Software vs. Hardware matters).

3. **Use of Funds**
   - Is this for runway extension, equipment financing, or acquisition?

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## Venture Debt Framework

### Priority Order
1. **Underwriting** (Assessing the probability of the next equity round).
2. **Structuring** (Determining the loan amount, interest, and warrants).
3. **Covenant Design** (Setting growth/liquidity markers).
4. **Monitoring** (Tracking burn rate and traction post-funding).

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## Technical Lending Steps

### 1. Warrant Calculation
- Determine the "Warrant Coverage" (e.g., 10% of the loan amount). 
- Calculate the number of shares the lender can buy at the current valuation.

### 2. Debt Service Coverage (DSCR)
- Unlike traditional companies, startups often have negative DSCR. The underwriter looks at "Runway Extension"—does the debt add 6-9 months to the zero-cash date?

### 3. "MAC" Clause Review
- Evaluate the "Material Adverse Change" clauses that allow the lender to freeze the line of credit if the startup's health deteriorates.

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## Output Format

### Venture Debt Term Sheet

**The Terms**
- Loan Amount and Interest Rate (usually Prime + Margin).
- Repayment Period (Interest-only vs. Amortizing).
- Warrant Coverage and Strike Price.

**Covenants**
- Minimum Cash requirements.
- Minimum MRR targets.

**Risk Assessment**
- Probability of "Refinance Risk" (Can they raise the next equity round?).

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## Scripts
- [calculate.py](./scripts/calculate.py): Deterministic functions for this skill's core computations. Run `python3 scripts/calculate.py` to self-test; import the functions instead of doing mental math.

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## References
- [Venture Debt 101](./references/venture-lending.md): Warrants and covenants.
- [SaaS Lending Metrics](./references/saas-debt-metrics.md): Underwriting based on MRR.

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## Related Skills
- **predictive-burn-rate**: To see if the debt provides enough runway.
- **startup-valuation**: To determine the value of the warrants.
- **risk-assessment**: For evaluating the default risk.