Articles
 


"Venture leasing can help startups make capital last…"
Reprinted from Atlanta Business Chronicle, December 1999

The growth of venture capital in Atlanta has attracted another form of financing to the area. Wilton, Connecticut based Leasing Technologies International, Inc. has opened a venture leasing office in Marietta to focus on technology companies that have secured their first rounds of venture capital.

Venture leasing refers to the financing of equipment such as computers to early-stage companies. Because the companies are not yet profitable, banks are not willing to risk loaning them money, so venture leasing is available to offer interest rates in the mid to high teens.

Kenneth R. Maggi, who opened the Leasing Technologies office in Atlanta, said venture leasing allows a start-up company to use its newly acquired venture capital to grow the business instead of buying computers that will be worth half their value in six months.

"Venture capitalists want to see the money go toward increasing enterprise value," Maggi said. "What we finance is worth less tomorrow than it is worth today."

Venture leasing is a little risky; the equipment is financed for three years with most of the payments due toward the end of the agreement. Leasing Technologies takes the risk that the company will receive future rounds of venture capital or can quickly become profitable.

In deciding which companies to lend money to, Leasing Technologies evaluates market potential and the management team, the same way a venture capitalist does. Healtheon Corporation and Earthlink Network, Inc. are two companies that LTI has financed in the past.

……Caroline Hubbard, Technology