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Financing Growth

Bridge Loans

A loan used to bridge an equity round, which typically has a duration of under one year and some warrants attached.

Eligibility

- You have an upcoming Series A (or higher) coming up with significant interest, and

- You have already raised in excess of £2mm, and

- You have annualised sales in excess of £1mm

2

Purpose

The purpose of a bridge loan is usually to delay an upcoming equity round in order to achieve a higher valuation during the round. 

 

This could be because a major sales contract is about to be signed, or a significant product update or launch is imminent and the fund raising would be better done after these events.

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There usually are strong spending covenants tied to a Bridging Loan where the business must stay within strict spending pre-agreed guidelines.  This is done to ensure the upcoming round remains on track. We will hold a fixed and floating charge over the business for the duration of the loan and will usually need to the senior-most lender.

3

Timing & Size

Bridging Loan are done ahead of a fund raise - Series A or later.

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As this is quasi-equity risk, due diligence is extensive and can take up to a month and we will require access to the data room.

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We will usually lend up to 10% of the expect size of the Series A funding round.  Note a Bridge Loan can often be rolled into a Venture Debt without incurring a new establishment fee.

4

Typical Terms

Establishment Fees: 2%-3%

Interest Rate: 15-20%

Warrant: 10-25%

Duration: Up to 1 year, repaid on fund raise.

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Note that the warrants will be struck at the equity fund raise and will remain outstanding once the loan is repaid.

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London, SW1E 6HF

United Kingdom

2C Parc d'Activités
8308 Capellen

Luxembourg

Nighthawk Partners Limited, Registered in the UK at Companies House 13056067

Nighthawk Advisors LLP, Registered in the UK at Companies House OC448063

Nighthawk Luxembourg SàRL, Registered in Luxembourg, Numéro d'immatriculation B290600

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