How to finance hardtech startups

This conversation with Zeev Krieger, Partner at Third Sphere and Managing Partner at Third Sphere Credit, explores the topic of financing climate hardware companies. Various financing options for climate hardware companies are explored, including equipment leasing, corporate loans, venture debt, project finance, and asset-based financing. The episode concludes with examples of how companies in the portfolio of Third Sphere have utilized different financing strategies. It delves into the significance of granularity in financial analysis and the transition to off-balance sheet structures. 

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Takeaways

Financing climate hardware companies is a key concern for investors and founders in the industry.

Different financing options for climate hardware companies include equipment leasing, corporate loans, venture debt, project finance, and asset-based financing.

Understanding the specific needs and complexities of a company's business model is crucial when choosing the right financing strategy. Lending against specific assets, such as smart radiator covers, requires a thorough understanding of the asset's performance and value.

Building a borrowing base is crucial for startups to validate their assets and demonstrate their ability to repay loans.

Granularity in financial analysis, including understanding working capital cycles and asset performance, is essential for risk management and loan structuring.

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Definitions:

Equipment finance: https://corporatefinanceinstitute.com/resources/commercial-lending/equipment-finance/

Asset-backed lending: https://www.investopedia.com/terms/a/assetbasedlending.asp

Revolver: http://tinyurl.com/revolverdefinition

Project finance: https://www.investopedia.com/terms/p/projectfinance.asp

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Connect with us:

Email us: [email protected]

Host: https://www.linkedin.com/in/samiaqader

Guest: https://www.linkedin.com/in/davidzeev/

Third Sphere: https://thirdsphere.com/