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FOR IMMEDIATE RELEASE: JUNE 29, 2009
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VENTURE DEBT: IS IT TODAY’S VIABLE ALTERNATIVE INVESTMENT?
Will Venture Debt Replace the Traditional Venture Capital Model?
Newport Beach, CA…Should accredited and institutional investors look to venture debt as a viable alternative investment in today’s market?
There are some reasons to consider it, according to John R. Nelson, a managing director of California Capital Partners, LLC. They include:
- Expanding segment of private capital investing that is still growing
- High velocity of capital; that is, usually under 24 months
- Senior investment position
- Equivalent to composite venture capital rates of return
- Risk is collateralized and has UCC-1 security
Recently, there have been multiple published proclamations that the venture capital industry is dead, or that the venture capital model is broken. Perhaps the traditional equity model is not performing as well as it did, but venture debt is developing a growing market share of private capital investments. Moreover, current economic conditions have opened a vast opportunity in financing distressed debt placements. Competition for premium deals is at an all-time low and the inventory of available investment prospects is high.
No doubt that’s why venture debt has grown from one percent of VC deployed in 2001 to seven percent in 2006, 10 percent in 2008 and is expected grow to 20 percent in 2010.
California Capital Partners, LLC (“CalCap”) manages venture capital funds focused on entrepreneurial businesses with high growth potential. In addition to funding rapidly
growing companies in technology, life sciences, and other targeted industries. CalCap offers key differentiators for investors and target investment businesses. CalCap’s leadership consists of venture capitalists that collectively have over 75 years of senior management and investment experience. They have completed over 300 capital investments, managed funds totaling over $2 billion in transactions over the past 25 years, and have achieved investment returns in the top decile of their industry. CalCap generally invests in product-stage companies with revenues or near-term revenue potential. The common bond between the CalCap managers is the persistent desire to build successful businesses and help skilled, dynamic entrepreneurs.