Runway Debt

Runway Debt

Newlight’s structured debt instrument is designed for earlier stage companies that own intellectual property with a clear path to commercialization. Qualifying elements of the program include:

  • Intellectual property rights which are valid, enforceable and unencumbered;
  • Specific and verifiable interest expressed by a qualified licensee;
  • Potential licensee has the technological and economic resources in place
    to commercialize the intellectual property;
  • Third party verification that the intellectual property has technical merit;
  • Independent economic valuation supporting the existence of a large and
    addressable global market;

The program allows for intellectual property to be leveraged below the cost of equity financing on a minimally dilutive basis, due to a structural risk profile not readily available to the investment community. This instrument’s attractiveness to investors is based on its ability to:

  • Generate equity-like returns to the investor without the risk associated with private equity and venture capital investments;
  • Provide a high coupon that bears current cash flow;
  • Yield additional cash returns through structural considerations;
  • Offer a level of equity participation through warrant coverage;
  • Limit capacity commitment to no more than five years;
  • Enhance portfolio diversification by adding a unique asset that is uncorrelated to the market;
  • Furnish a level of over-collateralization that mitigates non-performance events.