Vijay and I were both working at Eight Capital, a high yield fund that I cofounded, when we gave a bridge loan to Kodo (a startup from YC W21) to support their high growth rate while they were getting their YC funding. Kodo is an Indian company and had to complete some standard processes for that to happen, but they needed money right away. Our loan allowed them to accelerate their growth and they ended up having an amazing Demo Day result.
We wondered, could this be repeated with other startups or was it a one and done investment? We looked at publicly available data and quickly came to the conclusion that we could indeed underwrite venture debt to seed to early stage startups. That was the genesis of the 8vdX venture debt marketplace.
We launched 3 months ago and have already provided venture debt to 16 startups. In good YC fashion, weβve been focused on our batchmates to begin with :) But we believe this model can scale beyond the YC ecosystem and weβre very interested in that.
Why do we think this makes sense right now? Seed rounds today are the same size as Series A used to be a decade ago. But there are no existing players who provide venture debt to early stage startups. Last year, seed and early stage and Series A startups raised ~$100B from equity investors. Venture debt can be up to 25% of the balance sheet of these rapidly growing companies, making this a $25B annual opportunity in this underserved market.
Our loans are founder friendly. We do not force founders to open captive bank accounts, cash flow sweeps, take personal guarantees of the founders, or force the startup into bankruptcy if the startup is unable to repay. We have a simple and transparent application process to receive funds through the 8vdX digital platform.
Currently, startups can apply digitally for up to $150k of debt by visiting our startup portal at 8vdx.com, and upon approval, the funds are wired to their account on the same day. 8vdX has a capital-light business model as the venture debt to the startups are entirely funded by angels and institutional investors through the marketplace. We have a deep product pipeline which includes multi-currency venture debt that can be extended on day zero to international companies. We will be supporting local currency venture debt for startups in India, Australia, United Kingdom, Mexico and Indonesia for the YC S22 batch and our goal is to support even more countries in the future. We are also inviting platform partnerships from online investment apps to distribute the 8vdX venture debt offering to their clients.
Vijay and I look forward to hearing your ideas, questions and feedback. Thank you!
by Andrey
Azimov