By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
AmextaFinanceAmextaFinance
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
9
Notification Show More
Videos
Nvidia’s big $4 trillion milestone: Why some say the stock could go even higher
18 hours ago
Videos
Why 3D printed houses are on the rise
19 hours ago
Videos
Elon Musk wants to launch a new political party. Here’s why some people think it won’t work.
2 days ago
Videos
Why Even High Earners Are Living Paycheck To Paycheck
2 days ago
News
Bank of America: Higher Yielding Preferred Stock Is Still Attractive (NYSE:BAC)
2 days ago
Videos
“Invest in what you know.”
3 days ago
News
‘All the banks were lying’: Tom Hayes on his decade-long battle for justice
3 days ago
Videos
Tesla Opened A Diner In LA — Here’s What It’s Like
3 days ago
News
Wall Street Roundup: Tesla Skepticism, Google Stands Out, DORK Shorts
3 days ago
Aa
AmextaFinanceAmextaFinance
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
AmextaFinance > Finance > New Firms Seizing Opportunities In A Post-SVB Era
Finance

New Firms Seizing Opportunities In A Post-SVB Era

News Room
Last updated: 2023/08/03 at 6:01 PM
By News Room
Share
6 Min Read
SHARE

The collapse of Silicon Valley Bank (SVB
VB
) had a profound impact on the venture debt market. Venture debt has been a complementary source of non-dilutive capital alongside traditional venture capital (VC) for more than two decades.

Contents
Who Is Stepping In To Fill The Void?Strategies For The Private Debt MarketLending Of The Future

Even though SVB’s collapse only happened recently—in spring of 2023—the effects are already being documented. According to Pitchbook’s Q2 2023 PitchBook-NVCA Venture Monitor, early stage lending in the first six months of 2023 fell 44% year over year. This was SVB’s core market. It remains to be seen if First Citizens Bank—the new owners of SVB—will continue its lending to early stage startups based on the VC relationships and a multi-product approach.

According to a Pitchbook analyst note from the spring Venture Debt Conference, “Silicon Valley Bank’s collapse has blown open a huge opportunity to take up more market share of venture debt.”

Recently, much has been written about rising inflation, technology capital market retrenchment, and private debt firms tightening lending practices. Having a major source of venture debt no longer available to young businesses and startups just increases funding difficulties. So will this resource continue to be scarce, or are other options already establishing themselves?

Who Is Stepping In To Fill The Void?

While there hasn’t yet been an exact replica of SVB arise, other options for venture debt have experienced growth. It seems that established incumbent venture debt players such as Western Technology Investment, Triplepoint Capital, and Trinity Capital have already benefited from the current market.

According to Maurice Wedergar, CEO of WTI, “It’s hard to imagine there could ever be another SVB. They had a unique position in the market with their ability to offer inexpensive debt coupled with a broad portfolio of banking products.”

Wedergar continues, “It seems unlikely that regulated banks will be allowed to be as aggressive in the future. We have seen a surge in deal flow since March.”

Alongside established players, a fresh wave of private debt firms are entering and taking hold of the market. These firms are disrupting existing generalist venture debt strategies.

As the venture capital industry expanded, it gave rise to new VC firms with specialized niche strategies and industry-focused expertise. In a similar vein, the venture debt market looks to be following a similar pattern.

Strategies For The Private Debt Market

Wheelhouse Partners is an innovative new player in the private debt market. Unlike traditional funds, Wheelhouse primarily focuses on companies that have digital channels for online growth. This can include either direct-to-business or direct-to-consumer. Wheelhouse’s strategy leverages digital marketing expertise and its operating capability to add value to its portfolio. They term it “Modern Venture Debt.”

Wheelhouse Partners founder John Occhipinti says, “We combine more than 40 years lending experience with some of the most talented digital marketing teams in the world. We not only provide capital, but also offer domain and operating expertise to help entrepreneurs grow their businesses.”

Unlike venture capital, venture debt firms cannot afford as many write-offs. Multiple loan write-offs can more acutely impair a debt fund’s overall returns. This is why early-stage lending requires successful underwriting of risk.

“Our approach gives us an information advantage for underwriting,” says Matt Maloney, a 30-year ex-SVB lending veteran and advisor to Wheelhouse. “Unlike generalist firms, we spend as much time with our analyses diving into the companies’ digital dashboards as we do reviewing financial statements.”

Another example is Brex, which entered the venture debt market with additional offerings not restricted to non-dilutive capital. Brex offers software and services expense management, travel, credit card, bill pay and financial modeling. Their tools also give them insight into cash flow and underwriting risk.

Lending Of The Future

The era of relationship lending solely reliant on VC contacts could be a thing of the past. Those poised for success will be those who can offer value to entrepreneurs that extends far beyond monetary support in addition to a deeper comprehension of underwriting risk.

The market is also continuing an important cycle. Businesses that took out loans in 2020 had more plentiful access to VC funding alongside their debt, making repayment easier. With capital markets constricting and fewer lenders in the early stage, many entrepreneurs will be struggling to find continuing funding for loan repayment.

So what does the future hold? Smart new innovative lenders originating loans from the second half of 2023 will likely be top quartile vintage for limited partner investors

Read the full article here

News Room August 3, 2023 August 3, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Nvidia’s big $4 trillion milestone: Why some say the stock could go even higher

Watch full video on YouTube

Why 3D printed houses are on the rise

Watch full video on YouTube

Elon Musk wants to launch a new political party. Here’s why some people think it won’t work.

Watch full video on YouTube

Why Even High Earners Are Living Paycheck To Paycheck

Watch full video on YouTube

Bank of America: Higher Yielding Preferred Stock Is Still Attractive (NYSE:BAC)

This article was written byFollowThe Investment Doctor is a financial writer, highlighting…

- Advertisement -
Ad imageAd image

You Might Also Like

Finance

4 Ways To Avoid Fake Shipping Fee Swindles

By News Room
Finance

Dell Supports Endeavor Miami’s Quest To Empower Black Founders

By News Room
Finance

The World’s 10 Most Expensive Cities To Live

By News Room
Finance

Biden Sends Student Loan Forgiveness Emails To 800,000 Borrowers

By News Room
Finance

New Student Loan Forgiveness Application For Those With Medical Issues

By News Room
Finance

Who Really Owns Nursing Homes, And How The Feds Are About To Learn More

By News Room
Finance

Gone Are America’s Cushiest Federal Prisons

By News Room
Finance

Can You Still Get Insurance After A Cancer Diagnosis?

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

YOUR EMAIL HAS BEEN CONFIRMED.
THANK YOU!

Welcome Back!

Sign in to your account

Lost your password?