Venture Debt Scouting Report: Square One Bank

Venture Debt Scouting Report: Square One Bank
Posted on Fri, 9 February 2018 by Scott Orn

Video: What Should You Know about Square One Bank as a Venture Debt Lender?

This is your scouting report for Square 1 Bank and their venture debt services.

First of all, we work with two great people there, Laurie Lumenti and Jeff Griffor. Jeff’s on the East Coast. Laurie’s on the West Coast. They’re both seasoned professionals, been doing venture debt for a very long time. They know their stuff, and they’re great to work with.

For Square 1, Square 1’s actually an interesting story. They were a startup bank, and then recently they were acquired by a much larger bank, so their balance sheet is much bigger, and they can do much bigger deals, more creative deals, and get in there where maybe they got priced out of or couldn’t quite compete in the past.

So they’re much more aggressive now, great bank to work with. Now, like all other banks, some of the negatives with Square 1 is they typically use an investor abandonment clause or a MAC clause, something to mitigate their risk in a downsizing situation.

Thus, if you’re working with a bank, any bank really, but Square 1 does this, be careful of the MAC, be careful of the investor abandonment clause. On the positive side, banks like Square 1 typically have a low cost of capital, low warrant coverage, and they provide other services like your banking, housing your cash, things like that. They’ll pay if you need it.

In summary, Square 1’s a great venture debt partner. Laurie and Jeff are terrific to work with, and they offer the same typical bank value proposition, which is low cost to capital, but there’s a little downside in that you got to be careful of the MAC and investor abandonment clause.


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