Investor Profiles: Andy Weyer

In this edition of our investor profile series, we’re spotlighting Andy Weyer, Partner at Spinta Capital, a debt advisory firm serving growth companies in technology, consumer, and healthcare sectors. With over two decades of experience in venture debt, Andy offers a unique perspective on navigating this often-overlooked financing option for startups.

Spinta Capital and Its Mission

Can you introduce Spinta Capital and explain what you do?

Spinta Capital is a debt advisory firm founded in 2016 by my partners, Todd Schneider and Austin Dean. Our focus is helping emerging growth companies in technology, consumer, and healthcare sectors secure debt financing for things like growth capital, working capital, M&A, and more.

We work with a network of over 500 lenders and leverage our collective $3 billion in loan transaction experience to help founders secure debt on optimal terms. The goal is to save entrepreneurs time and money, delivering a service that essentially pays for itself.

What makes a business a good fit for Spinta Capital?

We primarily work with startups that are later-stage, though they’re often still burning cash. Most of our clients are VC- or PE-backed, but we occasionally work with bootstrapped companies as well.

Venture debt needs start around $2-3 million, though our average deal size is generally $15-50 million. We often work with companies multiple times, reflecting the cyclical nature of debt financing. Startups typically raise debt every 12-24 months, which aligns with the interest-only periods on most debt facilities.

Debt Done Right: What You Need to Know

What makes venture debt different from equity, and what should founders know?

The risk-reward models for debt and equity are fundamentally different. Equity investors swing for the fences; they’re looking for that 10x return. Lenders, on the other hand, prioritize capital preservation. They want their money back, plus interest and warrant coverage.

Debt is generally less dilutive than equity, but it comes with more structure. For instance, lenders often impose covenants, requiring a startup to maintain certain revenue levels or minimum cash balances. It’s important for founders to understand those obligations before pursuing debt.

When is the best time for startups to consider raising debt?

The optimal time to raise debt is when you don’t need it. Typically, early-stage startups secure debt right after closing an equity round, when cash reserves are strong. This gives founders more negotiating power and ensures they’re not raising debt from a position of weakness.

For example, let’s say a Series A company raises $10 million in equity and secures an additional $3 million loan commitment. Eighteen months later, when cash reserves from the equity fundraise are running low, that debt facility can either extend the company’s runway or serve as negotiating leverage in advance of the next equity round. Even if the debt facility is not drawn, loan availability enables entrepreneurs to fundraise from a position of strength.

Another point at which startups should consider raising debt is when there is a well-defined use of proceeds — say, sales and marketing spend with a strong payback — that will generate profitable growth leading to a clear path of debt repayment.

What are the risks or challenges associated with venture debt?

Debt is inherently different from equity, and founders need to approach it with their eyes wide open. Some key risks include:

• Covenants: Debt agreements often include financial covenants, such as maintaining a minimum cash balance or meeting revenue targets. Breaching these covenants can lead to increased costs or, in extreme cases, repayment demands.

• Lender Relationships: Choosing the right lender is crucial. Some lenders are more flexible during tough times, while others take a stricter, more draconian approach. Founders should consider both the terms and the reputation of the lender.

Founders should also keep in mind that lenders prioritize repayment. In the event of a liquidation, lenders sit at the top of the preference stack, while equity holders are last in line. This difference in priorities can sometimes lead to tension, particularly during an acquisition – when the outcome that each party is trying to optimize for starts to diverge.

Andy’s Journey and Advice

What advice do you have for founders pitching to lenders?

Pitching lenders requires a pragmatic approach. Unlike equity pitches, sky-high projections are actually a red flag in debt pitches. Lenders value realistic plans, so with debt pitches, you want to underpromise and overdeliver. It is very important to have a well-prepared data room and present a strong financial narrative, ensuring it’s easy for credit committees to say yes.

How did you get started in venture debt?

I’ve been in venture debt for over 20 years, starting at Comerica Bank and later moving to Square One, where I stayed through its IPO and eventual acquisition by Pacific Western Bank. I also worked at a couple of venture debt funds before joining Spinta Capital.

What is a fun fact or surprising trait about you?

I love golf, the challenges that it presents, and the character that it builds. You can also learn a lot about your playing companions over 18 holes, and I’ve been fortunate to make a number of valuable business connections on the course – including those made with my partners at Spinta, which eventually served as my impetus for joining the firm. As for fun facts, I once wagered a loan fee with a prospective borrower over the course of a golf match. I won’t tell you which firms were involved or who won – only that I ultimately closed the deal!

How should someone reach out to Spinta Capital if they think you might be able to help?

For those looking to explore debt financing options, you can connect with me via LinkedIn or visit Spinta’s website.