Venture debt specialist Kreos Capital has committed more than €100 million from its third fund.
Kreos, which means debt in Greek, had the final close of its fund at the end of 2006 with €200 million ($260 million). This money can be recycled when loan repayments are returned to the fund and so the fund will commit substantially more than €200 million during its lifespan.
The fund offers financings of up to €16 million through secured loans leases to venture capital backed start-up companies in Europe and Israel. It provides venture leases which are based on a company’s fixed assets, and venture loans which are more flexible and can be based on a company’s intellectual property and its receivables.
Venture debt is a means of providing complementary financing to raise more capital for start-up companies. The means of financing has typically been more popular in the US but it has grown since Kreos entered the European venture debt market in 1998.
In the US venture debt providers include Gold Hill Venture Lending Partners, Silicon Valley Bank and Western Tech. While in Europe and Israel, ETV Capital, formerly known as GATX European Technology Ventures, and GE Technology Finance both provide venture debt financing.
Mârten Vading, general partner at Kreos, said: “We don’t pretend we are technology experts and so we do not sit on company’s boards like a standard venture capitalist.” But Vading said unlike a bank which is obliged to accept close to zero risk, Kreos introduces less covenants protecting the loan, and it will not pull funding in the wrong situations until other options have been considered.
Kreos survived the venture capital crash in the early part of the decade. It has completed nearly 200 transactions in 12 countries across Europe and Israel and committed more than €400 million. The company changed its name this year from European Venture Capital.
The fund’s investments include CodeMasters, a European software game-maker, IP Access, a maker of small sized 3G access points and Nano Radio, which makes small chips for wireless technology.