Venture debt as bridge financing
Prof. Juanita Gonzalez URIBE
Associate Professor of Finance
Department of Finance
London School of Economics and Political Science (LSE)
United Kingdom
Date: 7 April 2026 (Tuesday)
Time: 15:00-16:30
Venue: E22-G008
Host: Prof. Jiahong SHI, Assistant Professor of Finance
Abstract
Venture debt accounts for roughly 15% of aggregate venture capital financing, yet conventional wisdom suggests debt is the wrong instrument for such risky, unprofitable borrowers with limited tangible collateral. We argue the opposite: uncertainty makes debt optimal. Using novel contract-level data from five major venture lenders, we bring Mauer and Triantis (1994) to data for the first time and extend it in three directions. Waiting-period debt is supplied by specialist lenders independent of VCs; contractual architecture makes full repayment inevitable at option exercise, with uncertainty induced liquidity events retiring debt with a coefficient indistinguishable from one; and warrants align lender incentives against premature liquidation, and are larger when borrowers have more patents. Venture debt preserves the option value of the highest uncertainty ventures that limited bridge financing would otherwise force to abandon their experiments prematurely.
Speaker
Prof. Juanita Gonzalez URIBE is an Associate Professor of Finance at the London School of Economics and Political Science and Co-Director of its Financial Markets Group. Her research focuses on entrepreneurial finance, private equity, and innovation, with a particular emphasis on how financial institutions and policy shape high-growth entrepreneurship across regions including the UK, Latin America, and the United States. She has published in leading academic journals such as the Review of Financial Studies and the Journal of Financial Economics, and her work has received multiple awards, including the Kauffman Dissertation Award and the Coller Prize. Alongside her academic work, she is Director of Positive Impact MPG, advising organizations on sustainability, impact, and policy, and serves on advisory boards including the British Private Equity and Venture Capital Association and the Startup Coalition.
All are welcome!
