All Money Is Not Created Equal

Chapter 2All About Growth: My Journey from Venture Capital to Venture Debt

For most of my adult life I have been obsessed with providing companies with the capital they need to grow. For much of that time, I did it in very traditional ways: first as an investment banker, then as a venture capitalist. In 2010, after more than 20 years of investing in companies in exchange for equity, I came to see the light about the vital – and underappreciated – role of debt in funding growth at pre-profit companies.

While I've always been focused on helping companies grow, my route to venture debt was unintentional – and somewhat tumultuous – but has proven highly rewarding.

In 1989, I left investment banking to join the asset-management subsidiary of the British bank Lloyds Bank plc, where I was responsible for strategy and venture capital (VC) investing. In October 1989 and January 1990, I made my first two venture investments. The first one failed; the second one worked out spectacularly well – a 1,470.4% internal rate of return (IRR) and 464.8× multiple on invested capital (MOIC) in a span of 26 months.

When I moved from investment banking to the money-management world to focus on venture-capital investing, the executive who ran the investment-banking business tried to convince me not to go. “All you're going to be doing is dealing with problems,” he warned me.

That isn't how I saw it. To me, investment banking was a transactional business, and venture capital represented a chance to ...