• Title/Summary/Keyword: Silicon Valley Bank

Search Result 1, Processing Time 0.016 seconds

The Possibility and the Way to Introduce of Venture Debt to Encourage Growth of Ventures (벤처기업의 성장 촉진을 위한 벤처부채의 가능성과 도입방안)

  • Hong, Jong Soo;Na, Sumi;Park, Jaesung James
    • Asia-Pacific Journal of Business Venturing and Entrepreneurship
    • /
    • v.15 no.4
    • /
    • pp.17-25
    • /
    • 2020
  • Venture debt is a prominent funding tool to promote scale-up of ventures. In the growth stage, venture firms that need large-scale funding can accelerate their growth by leveraging venture debt without diluting their shares, while venture capitals can quickly recollect their investments by accelerating the growth of the ventures they invest. By supplying venture debt, banks can diversify their asset primarily concentrated on loans, and improve the return on assets. As in the case of Silicon Valley Bank, a leading venture lender, closer cooperation between the two agents is essential to supply venture debt. One is the venture capital, an equity capital supplier, and the other is the bank, a debt capital supplier. To this end, we propose "credit risk sharing venture loans" and "venture loan pooling". The former encourages banks' participation in the venture debt market where the manager of Korean Fund of Funds, KVIC and policy guarantee schemes such as KODIT and KIBO screen or partially absorbe the risks inherent in venture loans. The latter reduces the burden of banking on individual venture loans through securitization.