WooMe (San Francisco, CA) the online video speed dating site, just secured a $3M bridge loan from Mangrove Capital Partners and Atomico (Niklas Zennstram - Founder of Skype, Kazaa). The company which was just launched two-and-half months ago, has seen some significant growth during the period but the bridge loan is a bit odd at this stage of their lifecycle.
Typically, bridge loans have some coupon attached with them which would mean that part of the note is being used to pay off interest for the note itself. A bridge loan is used to bridge a company from its current situation to an expected next round of actual funding (which could sometimes take out the note but not usually because the incoming investor wants his money to have a return). Also, a $3M bridge is pretty significant for a company with seemingly limited revenue but again, it’s a clear sign that the company will be active in another round of funding within the year. Bridge loans aren’t often longer than that and can carry significant monthly interest payments.
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Mangrove Capital Partners is based out of Luxembourg, Germany and we do not cover foreign VC firms since we find that most of our audience is looking for more local access to capital.
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2 responses so far ↓
1 Tom Banks // Feb 7, 2008 at 1:37 pm
Mangrove cap is extremeley entrepreneur friendly so hearing they are the lead on this doesn’t suprise me. nor would i be suprised to hear that the terms are quite attractive for Woome.
2 John Howe // Feb 10, 2008 at 8:09 pm
I agree about Mangrove as a firm but I never view a bridge loan as a sign of being entrepreneur friendly. These things can be very costly and even the best terms still usually have interest payments which are paid for by the note.
I have also found that bridge loans, depending on the terms, can scare the next round investor if part of the term was a payback in a short term which only an infusion of cash could realisticlly do.
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