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venture capital loan

Page history last edited by PBworks 11 years, 11 months ago


venture capital debt deal:  strange, but sometimes available financing alternative:  see example below





Is it me, or are we seeing a lot more venture finance deals these days? Web 1.0 holdover Cooking.com is the latest to jump on this bandwagon. It just took out a $7 million loan from ORIX Venture Finance. The ten-year-old dotcom—which is basically a shopping portal for cookware—is one of the early Idealab companies that is still around.


Whenever I see a venture debt deal, I wonder why the company couldn’t get regular venture capital or find another source of funding. Did they get a better deal through the bank loan or could they not find any other takers? With a “startup” this long in the tooth, I suspect it is the latter. I am not familiar with the specifics of this deal, but it is common for venture debt to be structured as a convertible loan, meaning that the lender can convert the loan into stock at some point in the future. Sometimes these are treated as bridge loans with the hopes that an IPO will make converting the loan worthwhile. If Cooking.com is indeed considering the IPO route (again, pure speculation here), it would be well-advised to radically reinvent itself first. The public markets are not too receptive to Web 1.0 retreads right now (see Classmates.com’s flubbed IPO attempt).


As Allen Stern at CenterNetworks points out, perhaps Cooking.com can use the funds for a much-needed facelift. It could definitely use more content and community features baked right into the main parts of the site, instead of shunting them off to a separate forums tab. When people want to learn about cooking, it looks like content-heavy sites like the Food Network or AllRecipes are more popular destinations:


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