April 14, 2020

How can the gap until the next equity round be bridged?

The fund may itself provide the portfolio company with quasi equity, such as convertible or shareholder loans. When granting loans, a fund should ensure that it does not qualify as a loan-originating fund. This could have regulatory consequences. Such qualification is unlikely if an equity participation in the company already exists. Otherwise, the regulatory framework should be reviewed.

Further straightforward debt financing possibilities exist via third parties, such as private debt funds, special situation funds, disstressed debt funds, venture debt funds and current government measures to combat the coronavirus pandemic (public funding through e.g. KfW Capital, European Investment Fund, the High-Tech Gr├╝nderfonds or Coparion).