Transformation of Venture Debt Markets

The life sciences debt financing market has experienced a turbulent decade. From the highs of the mid-2000’s to the credit crisis of 2008, and eventually to the slow but steady climb since 2010, investment and opportunity have expanded and contracted.

Many of the market forces that made equity markets so volatile during this period impacted debt financing as well. But alongside those forces were innovations in the debt financing space correlating with a significant growth in the availability of funds. An influx of capital seeking yield in a zero interest rate environment added a variety of structures and options for companies using debt to finance growth. Today, there is a vast array of alternative financing vehicles helping companies secure growth capital without the restraints of equity investments.

Historically, debt markets have sometimes been seen as inversely correlated with equity investment markets. However, as the Dow climbed higher and billion-dollar “unicorn” valuations became more common, cheap debt fueled by low interest rates grew in parallel with the public markets. Both eventually reached all-time highs around the middle of 2015. This month’s white paper explores in detail the origin, constriction, and eventual blossoming of the debt financing markets into a more mainstream, viable and often minimally dilutive tool companies may use to fuel growth.

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Best Regards,

Ben Campbell
President & CEO