Equipment Loans and Leases
Many Vencore clients choose to finance equipment rather than purchase it. This strategy is sound. Once you commit cash to fixed assets, it is not available for product and market development and other activities that increase your chance of success.
An equipment loan or lease is an effective way to "extend the cash runway." In essence, you are stretching the payment timeline, repaying the loan with proceeds from a new round of financing or ramping revenue. At this juncture, money is cheaper, because your company’s valuation is higher.
Before making an equipment loan, Vencore analyzes your business plan and assesses management and investor quality. If we conclude that your company is likely to continue its forward momentum, we make the loan.
If you prefer to lease equipment, we actively assist in the process, pay the vendor directly, and own the equipment. If you decide to go with a loan, you deal directly with the vendor and are reimbursed by Vencore. Each strategy has advantages for you.
Growth Capital Loans
Many companies want to raise cash to help fund research and development, product launches, and go-to-market strategies. Vencore considers this type of loan "growth capital."
Candidates for growth capital loans are solid companies with a demonstrated ability to raise equity capital and successfully get products to market.
Growth capital helps companies pay for expenses, thereby deferring the need for equity financing. It can also be used to support the growth of accounts receivable and inventory, but is usually not tied directly to specific asset purchases.
To secure this type of loan, you grant Vencore a blanket filing on your company assets, which often includes its intellectual property.
Loan and Lease Terms
Vencore usually expects repayment of loans or leases over two to three years. Your monthly payments include an implicit interest rate. At the end of the term, you can buy leased equipment from Vencore at fair market value. In the case of a loan, you make a final payment that includes a deferred fee.
Venture debt offers business value by allowing you to defer equity financing until a milestone is passed that raises your company’s valuation. In consideration for this value, you grant Vencore a warrant to purchase stock. Warrant size varies with deal size, current valuation, and several other factors.