The Conundrum: For many individual investors and entrepreneurs in the venture capital and private equity arena, liquidity can often be an ongoing issue. IPO’s are tending to be pushed further and further out in the horizon, and companies increasingly tap private markets and existing stakeholders for capital. As a result, many individual investors find that they lack the liquidity to participate in funding rounds, invest in new ideas, or to bridge themselves to an eventual sale, IPO, or other liquidity event. For these enterprising individuals, options in the marketplace are rather limited. Often times, they have accumulated considerable value on paper yet have no ability to realize liquidity to pursue other endeavors.

The Solution: New York Private Finance’s unique approach to lending offers a solution to investors in this predicament. By accepting illiquid assets such as equity in private companies as collateral, NYPF enables the investor or entrepreneur to unlock trapped liquidity in order to pursue strategic investments and advance their growth objectives using non-dilutive capital. The result is continued wealth creation or diversification without the need to sell equity or even provide warrants.

Structure: These loans are made to the owner or their ownership vehicle and are priced attractively relative to private equity or mezzanine financing at the corporate level. The loans are composed of a current interest portion and a “shadow equity” component, designed to lessen cash interest burden for the borrower while aligning interests between borrower and lender. To qualified borrowers, loan amounts range from $5 million to $35 million and advance rates range as high as 35% of the borrower’s equity value, depending upon the value, risk, and diversification of the collateral. Our clients have used this structure to dramatically accelerate their wealth accumulation by providing dry powder availability that enables them to continue investing strategically and opportunistically.

To find out more about how our structured loans might solve your client’s capital and liquidity needs, feel free to contact Brian Bristol or visit our website.