Late-stage venture capital firm OneVentures is launching fundraising for a $200 million target second venture credit fund.
The Sydney firm believes growing interest in venture credit as a non-dilutive alternative to equity capital will be boosted as tech scale-ups, needing to extend capital runways, seek to avoid the prospect of raising equity capital in down rounds.
The firm will be seeking commitments from institutional investors who will receive predictable quarterly yields.
This will be OneVentures’ second venture credit fund following its initial $100 million fund launched in 2019.
Partner Nick Gainsley will continue to lead the credit offering. Gainsley joined OneVentures from Kreos Capital – which offers debt packages to high-growth technology and healthcare companies in Europe and Israel – with the launch of the first debt vehicle.
While OneVentures will provide debt capital to businesses which would not be considered by banks, unless founders offered security such as real estate, the firm will only consider later-stage technology businesses with substantial recurring revenue and strong growth.
Interest rates for venture debt packages are typically above 10% but for founders of fast-growing companies that can be an attractive alternative to giving up equity.
Image: Healthcare digital brands company Eucalyptus is one of the scale-ups which have been financed by OneVentures’ first credit fund.