Venture Debt: Term Sheets, Warrant Coverage, Runway & Effective Cost

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Turn a venture debt term sheet into a monthly debt-service schedule, project cash with and without the loan and measure how many months of runway the debt really buys.
• Turn four lenders' warrant terms into coverage dollars, a number of warrants and the fully diluted ownership the lender gets, then value Kestrelmoor's warrants at an exit price.
• Build the monthly cash flows of two venture debt offers, find each one's effective annual cost with IRR and see that the lower stated rate is not the cheaper loan.
• Switch to the lender's side, add the final payment and the warrant proceeds to a dated quarterly schedule and measure with XIRR how much the warrants add to the lender's return.
• Compare raising USD 4 million as equity with taking it as venture debt with warrants: new shares, the founders' fully diluted stake, their value at exit and the exit value where both choices are equal.
• Project cash under three burn scenarios, highlight the months that breach the lender's minimum-cash covenant, count the compliant months and size the equity needed to cure the breach.
• Compute the all-in cost of three ways to raise USD 3 million across six exit values, pick the cheapest one per row with INDEX/MATCH and chart the three cost curves.
• Calculate the lender's claim when Orbitile defaults, the recovery in three exit scenarios, the probability-weighted expected recovery, and compare it with the present value of a restructuring offer.