Over the past decade, private credit has found its way into virtually every institutional portfolio. Yet, one niche within this space has been largely overlooked: venture debt—senior secured loans provided to VC-backed growth companies, typically featuring an "equity kicker." Historically, this asset class has delivered a gross return of approximately 12% in the U.S.—more than 2 percentage points above direct lending—while maintaining a virtually identical loss rate.
In the U.S., debt accounts for 20–25% of growth capital; in Europe, that figure is 5–10%, and even lower in the DACH and CEE regions. For investors, this translates to less competition among lenders, greater pricing power, and a higher share of warrants. The question is: how can one gain exposure to this asset class, and what should one look for?
During this evening session, we will explore three key questions from an investor’s perspective:
1. Where does venture debt fit into a portfolio?
It offers recurring cash yields starting from year one, avoids the "J-curve" typical of venture capital, and provides capital repayment within three to four years rather than ten. At the same time, it carries venture-style risk—just packaged differently. We will position this asset class relative to private credit, buyouts, and venture capital, illustrating its specific role—and limitations—within an investment allocation.
2. How can one distinguish a strong venture debt manager from a weak one?
Returns are generated not through interest, but through underwriting. Standard rating models fail when applied to companies rated below B+. We will demonstrate how established investors utilize scoring models—including a framework we developed ourselves based on hundreds of individual cases—and discuss deal-breakers, structuring parameters, and what actually happens in the event of a default.
3. What does a deal look like in practice?
We will examine a case study: CleanCloud, a London-based vertical SaaS company, acquired an Australian payments provider—financing the transaction with growth debt rather than an equity round. Spanning three jurisdictions, this deal involved a single term sheet. We will break down the credit case, the structure, the pricing logic, and the key lessons learned.
Peter Richl, CFA, and Christopher Nahler—founders of Danube Flow Fund, a Vienna-based venture debt platform serving the DACH and CEE regions—will host the evening. Previously, both were instrumental in building the "Growth Basket" program at Raiffeisen Bank International, which involved €250 million in capital and approximately 20 financing deals. Danube Flow Fund is currently in its fundraising phase.
Please register by sending an email to kathrin.schneeweiss@cfaaustria.org.