Product Details

by Robert T. Kleiman, Ph.D.
Spring 2001 Issue

In the United States, venture leasing has been an established concept since the late 1980s. Venture lessors typically provide financing for general purpose equipment such as computers, telecommunication systems, test and measurement devices, and laboratory and office equipment for start-up and early-stage companies. However, one-of-a-kind specialized items are excluded. In exchange for the lease financing, the venture lessor receives monthly equipment lease payments, the equipment's residual value, and equity warrants in the company. The warrants provide the venture lessor with the opportunity to purchase common stock at a stated price up to a specified expiration date based on the price paid by venture capitalists in the latest round of financing.