OVERVIEW
A.R.I.’s fund strategy aims to provide investors (limited partners) with superior risk-adjusted returns, security of capital, strong portfolio diversification, and co-investment opportunities.
It is one of the best times in history to be a venture lender, particularly with no legacy portfolio underwritten during the past few years of irrational exuberance in the financial markets.
Currently, there is substantially more demand for venture debt than there is available supply given that approximately $750 billion of venture capital has been deployed to startups since 2020 and now capital providers are scaling back.
The cost of capital for startups has increased significantly, commitments are smaller, and transactions are taking much longer to close.
With the tightening of investment standards and the scarcity of available venture debt, now is the perfect time for investors to partner with A.R.I. to achieve superior risk-adjusted returns and security of capital.
INVESTMENT STEPS
A.R.I.’s Venture Debt Opportunities Fund just opened to Qualified Clients (with a minimum net worth of $2.2 million, excluding the value of primary residence).
While this type of fund offering has traditionally been available only to institutional investors with minimum commitments greater than $1 million, A.R.I. is now providing access for the first time to Qualified Clients and Qualified Purchasers via Schwab, Fidelity, and other major custodians.
If you would like to invest in A.R.I.’s Venture Debt Opportunities Fund please email IR@ARIVC.COM.
STRATEGY HIGHLIGHTS
• Strategy Overview: Short maturity, floating-rate, senior secured (1st lien), term loans and equity warrants.
• Historical Return: Gross returns in venture debt have averaged over 20% annually since 2005.
• Historical Risk: Loss rates in venture debt have been less than 0.25% annually since 2005.
• Company Stage: Series A through Series D.
• Company Size: Revenue of $10mm to $100mm.
• Loan Size: $3mm to $30mm.
• Loan Maturity: 2 to 5 years.
• Interest-Only Period: 12 to 24 months.
• Structure: Senior, secured (1st lien) by all assets, including intellectual property (“IP”).
• Timing: 4-6 weeks.
INVESTMENT ATTRIBUTES
Debt financing is provided following an equity raise and is best for companies with the following attributes:
• Recipient of at least $20mm in prior institutional funding.
• Annual Recurring Revenue (“ARR”) of at least $10mm with a sound business plan and clear path to sustainable free cash flow.
• Loan to Value (“LTV”) of less than 20%.
• Loan to ARR of less than 50%.
• Loan to cash (on hand) of less than 25%.
• Strong equity sponsors with a track record of success.
• Talented management team with prior experience building and successfully monetizing early-stage companies.
• Reached growth stage with significant traction, having already achieved strong product-market fit and a supportive customer base.
• Relevant competitive advantage in a high-growth, recession-resistant, sector that leverages innovation and technology.
• Attractive “Margins of Safety” via organic growth, viable capital structure, ample asset coverage, and strong VC-sponsorship.
• High conviction investment with attractive economics that fits within A.R.I.’s existing portfolio composition and risk guidelines.
FOCUS SECTORS
A company can be eligible for venture debt irrespective of the industry sector in which it operates. Some of the sectors that tend to be a better fit for venture debt include:
• Financial Technology
• Energy Technology
• Real Estate & Property Technology
• Agriculture Technology
• Healthcare Hardware & Services
• Manufacturing & Robotics
• Supply Chain & Logistics
• Defense
• Telecommunications
• Media & Entertainment
• Software
BENEFITS OF INVESTING WITH A.R.I.
• Equity-Like Returns with Senior Debt Risk
• Safely Investing in “Innovation” as an Asset Class
• Easy Access (Approved and Onboarded with Schwab and Fidelity)
• Superior Risk-Adjusted Returns (Targeting 15% to 20%+ Annually)
• Quarterly Income Distributions (Targeting 12% to 15% Annually)
• Security of Capital (1st Lien Loans)
• Interest Rate Hedged (Floating-Rate Coupons)
• Strong Portfolio Diversification (Low Correlation to Stocks and Bonds)
• Unlimited Equity Upside (With Stock Options)
• Co-Investment Opportunities (At No Fee)
• Institutional-Quality Infrastructure
• Robust Enterprise Risk Management
• Experienced Investment Team
PRIMED FOR IMMEDIATE SUCCESS
• Dry Powder to Invest on Favorable Terms
• Actionable Deal Pipeline of High Quality Opportunities
• Protection from Rising Interest Rates, Increasing Asset Correlations, and High Volatility
• Favorable Tailwinds Due to Increasing Demand for Capital from Startups & Decreasing Supply of Capital from Banks and VCs
• Unencumbered by Suboptimal Legacy Business Operations & Portfolio Issues