“We offer financing solutions for all use cases, including working capital, inventory financing, and payroll. ![]() There are different use cases that Klub is providing credit including inventory financing. We also have multiple partners on the supply side who are happy to extend the capital to the startups during this hour of crisis,” said Anurakt Jain, cofounder, and chief executive officer at Klub. “We do not have a capital pool but can issue starting $6K to $400K which we can provide in 48 hours. Sequoia Capital-backed revenue-based financing platform Klub is offering specific credit lines, term loans, EMI, and revenue-based financing model fusion. “There are many short-term and immediate payments that the startups won’t be able to pay, this may unfortunately even be the demise of many small startups,” Chachra said. This will take some time as per our understanding,” said a mid-size startup founder on the condition of anonymity.Ĭhachra of 8vdx said that startups need to get the money back at the earliest to be able to run payroll by the month's end as well as fulfill other short-term commitments which will create a huge problem. However, around 30 percent of our money is in the process of transfer to another bank. With around 80 percent of business in the US, several Software-as-Service (SaaS) businesses had deposited millions of dollars with the SVB as deposits. However, on March 13, the Biden administration announced that depositors of SVB will have full access to their money even as some startups said that a small portion of their money is in the process to withdraw and it will take time. This triggered a massive sell-off of its shares on Wall Street, triggering panic.Īfter multiple deposits worth millions of dollars were pulled from the bank in fear of a major financial crisis, California regulators closed down the tech lender late last night and put it under the control of the US Federal Deposit Insurance Corporation (FDIC) as receiver for later disposal of its assets. Silicon Valley Bank’s parent SVB Financial Group informed the market late on March 8 that it sold about $21 billion of securities from its portfolio, due to which it will have an after-tax loss of $1.8 billion in the first quarter. The firm 8vdx is part of Y Combinator's winter batch of 2022, and it claims to have an AUM of $5 million presently and is growing at the rate of 25 percent per week. We have also created a small $50, 000-emergency venture debt fund to help Y Combinator companies with emergency debt," said Ravi Chachra, founder of 8vdx, a YCombinator startup-focussed venture debt firm.įounded in 2021 by Ravi Chachra and Vijay Lavhale, 8vdx is a digital venture debt marketplace. "We got many calls from startups to provide emergency funding. Whichever debt structure you opt for, it’s vital to take references on lenders from your Board or advisors and choose a lender who will add value through useful connections (not just finance) and will be supportive over the long term through good times and bad.Indian venture capital firms and venture debt firms are setting up an emergency line of credit and debt options to help startups with immediate capital, especially for the working capital needs amid the Silicon Valley Bank (SVB) collapse. ![]() Rather than comparing just headline interest rates, companies should compare all terms between competing debt providers to calculate an overall cost of capital which includes arrangement fees, early repayment fees, exit fees, non-utilisation fees etc. Businesses should avoid waiting to approach lenders when cash is low or they are wanting a cash “bridge”, as lenders may then decline or charge a higher price due to the increased risk profile.Ĭompanies should also check each term lender’s offer carefully and avoid restrictive items such as covenants set at a level the company is unlikely to achieve, or very high “success fees” payable at exit. As such, companies may want to explore debt finance when times are good, and they have a lot of cash runway as they will get better offers from lenders. Earlier stage businesses will get the most attractive offers from lenders when they have just raised equity and therefore have cash and are less risky. ![]() Whichever debt financing option is most suitable for your company, timing is key.
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