Case Study: Insights into the Venture Debt Landscape with Runway Growth Capital

Sage Outcomes: Specialists in Market Research

Sage Outcomes is a specialized market research and consumer insights firm. Our mission centers on empowering businesses through data-driven decision-making. With a strong focus on research excellence, we partner closely with clients to offer actionable insights that foster business development. Our expertise lies in unearthing valuable data-driven findings, delivering strategic counsel, and fostering enduring partnerships.

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The Client: Runway Growth Capital

Runway Growth Capital supports entrepreneurs at every step of their journey. Their approach extends beyond monetary support, providing businesses with an invaluable knowledge base and an extensive network. 

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The Challenge

Runway Growth Capital approached Sage Outcomes to gain insights into the current perceptions and attitudes within the venture debt landscape among entrepreneurs, venture capitalists, and other capital providers in the venture ecosystem. The timing of this project also came at a pivotal inflection point within the financial sector: The collapse of Silicon Valley Bank (SVB). While conducting this research, Sage Outcomes explored the impact of the SVB collapse on the survey and interview respondents. 

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Some initial hypotheses from Runway Growth Capital were: 

• While taking on venture debt may be very attractive to some entrepreneurs, others are hesitant to consider it. 
• The general lack of understanding surrounding venture debt coupled with the recent catastrophic event of the Silicon Valley Bank collapse may have further impacted this narrative. Thus, the primary aim of this research was to compare and contrast attitudes between two key segment groups of interest: entrepreneurs and other capital providers in the venture ecosystem. 

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Sage Outcomes’ Dual-Pronged Approach

Understanding the multifaceted nature of the challenge presented by Runway Growth Capital, Sage Outcomes designed a comprehensive dual-pronged research strategy.

• Structured Online Survey: Recognizing the need for a wide-reaching and quantitative understanding of perceptions around venture debt, the first prong of the strategy was the implementation of a structured online survey. Surveys, with their systematic methodology, offer the feasibility to reach a larger audience and provide a statistically significant dataset. This methodology was chosen to capture a broad spectrum of data, allowing for comprehensive trend analysis, segmentation, and general market sentiment. The structured format ensured consistency in responses, enabling a more streamlined data analysis phase.
• In-depth Interviews: While surveys provide breadth, in-depth interviews offer depth. The second prong of the strategy centered around a series of carefully curated in-depth interviews with industry experts and key stakeholders. Chosen for their subject matter expertise in the venture capital space, these interviews were designed to garner nuanced insights. They provided a platform for open-ended discussions, capturing qualitative data that sheds light on the motivations, challenges, and perceptions of venture debt and their future outlook. This method was essential in understanding venture debt from a holistic perspective, offering a detailed understanding of the landscape.

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Research Process in Detail

The research process was both intricate and comprehensive. It began with the phase of questionnaire development, followed by detailed data collection from a wide array of entrepreneurs and VC/referral members inside and outside of Runway Growth Capital’s network. After data collection and moderation of the in-depth interviews, the survey data and interview transcripts underwent a thorough analysis. The results and findings were compiled and written into the 2023 Venture Debt Review white paper, which is published on Runway Growth Capital’s website. To read the white paper, visit their website: www.runwaygrowth.com

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Outcomes

The partnership between Sage Outcomes and Runway Growth Capital unveiled significant insights into the venture debt landscape of 2023. Key findings included:

• Adoption Trends: There was a clear upswing in the adoption of venture debt as a preferred funding strategy.
• Entrepreneurs' Perspective: Entrepreneurs demonstrated a growing preference for venture debt, largely attributing it to its inherent flexibility.
• VC/Referral Sources Insight: While VC/Referral Sources acknowledged the potential of venture debt in addressing funding shortfalls, their sentiment towards bank-backed venture debt shifted from a largely positive stance to a more neutral outlook.
• General Sentiment: Despite the turbulence introduced by the SVB collapse, the overall sentiment towards venture debt remained positive, reinforcing its perceived value in the entrepreneurial domain.

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If you’d like to learn more about this project or other projects that Sage Outcomes has worked on, please contact us. 

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If you’d like to review Runway Growth Capital’s 2023 Venture Debt Review white paper report that was written in collaboration with Runway Growth Capital, you can view it here: 2023 Venture Debt Review