Business

From Startup to Success: How Venture Debt Can Help Your Business Grow

Published

2 years ago

August 1, 2023

A new kind of funding is on the upswing for startups — venture debt. According to the US Chamber of Commerce, now that venture capital is drying up, “companies of all sizes look to raise more expansion capital via this alternative form of financing.”

As success stories proliferate of entrepreneurs using this funding solution in their early stages, interest in it naturally increases. Yet, venture debt isn’t the right choice for every business.

“Venture debt can open up exciting opportunities, but the decision to take on these loans is complex,” says Jay Jung, founder and managing partner of Embarc Advisors, a corporate finance advisory firm. “Problems can crop up when startups take on debt, so it’s important to weigh all aspects of this approach carefully.”

Venture debt explained

Venture debt is similar to other types of loans in that a business founder borrows money from the lender (usually an institutional bank, private investor, or fund that specializes in venture debt) and pays it back with interest over time. Companies that have already raised venture capital but are looking for more money to fuel their growth in-between equity rounds i.e., runway extension, typically use it.

“Venture debt provides funds with a short payback period — usually between 18 months and three years,” Jung says. “Lenders work with companies based on what makes sense for them at any given point in time.”

Venture debt helps businesses bridge funding gaps. “Startups are expensive,” Jung explains. “In their early days, most businesses need to spend time building their products or services while figuring out their go-to-market motion, so they usually don’t have a lot of revenue coming in. At the same time, they still need to pay the bills: employee salaries, rent on space, and other overhead.”

Indeed, as one recent study has discovered, “47% of startup failures in 2022 were due to a lack of financing.” For this reason, successfully securing venture debt can mean the difference between a company’s success and failure.

Venture debt also offers startups the ability to grow their business. “It can be a great option for any business looking to expand its operations, hire more employees and make strategic investments in technology or marketing,” Jung says.

Traditional versus venture debt

“Venture debt differs from traditional loans in a number of critical ways,” Jung says. “Traditional lenders look at a business’s past performance when determining whether or not to approve a loan. But for many startups, there isn’t a track record of past revenue. Plenty of new businesses operate in the red for years.”

For this reason alone, a traditional loan may be out of the question for some businesses.

“With venture debt, business owners can leverage the startup’s profitable future,” Jung explains. “While a traditional bank usually makes founders guarantee repayment by staking their personal property as collateral, founders can give venture-debt investors the right to purchase shares in the future, which is called a ‘warrant.’ In this way, they can use equity stakes to entice investors and other possible lenders.”

According to Jung, venture debt attracts investors because these loans tend to have higher interest rates than traditional loans. “In my experience, interest rates for venture-debt loans usually fall between 9 and 20 percent,” he says.

Options for venture debt

Startups have three options when it comes to venture debt. The first of these is term loans. “These operate much like traditional loans,” Jung says. “The lender loans the startup funds that must be repaid with interest after a certain period.”

Another option is revenue-based financing, which is paid back through a percentage of future revenue. “These loans can either be short- or long-term,” Jung says. “The important thing is that these startups need to have an established track record of generating revenue.”

The third option is factoring. “With factoring, the lender buys your accounts receivables for less than their face value,” Jung explains. “This gives the startup immediate funds, while the investor reaps the difference between their purchase price and the full amount of the bill.”

However, Jung urges caution with this method. “I’ve seen businesses get mired in situations in which they are never able to finish loans based on factoring,” he says. “They fall into a vicious cycle of relying on the factoring company and never actually get ahead, so the true cost of this approach can be a lot higher than it might first appear.”

Maximizing your success

The benefits of venture debt are numerous. Not only can these loans help you get your startup off the ground, but they can also give you the funds needed to grow as a company and expand into new markets. In the current environment where valuations have declined, extending runway through the use of venture debt may allow a company to grow back into its valuation and avoid a down-round. Still, employing this kind of funding successfully requires care.

“If you are interested in pursuing venture debt for your business, then do your due diligence,” Jung advises. “In particular, success will depend on accurately assessing your business’s needs, choosing the exact right financing option, developing a solid plan for repayment, and following it ruthlessly.”

While these steps may seem daunting, entrepreneurs who appreciate their difficulty may well be on the right track. This is one domain in which overconfidence could prove disastrous, but the good news is that — according to Jung — there’s a way to mitigate this risk.

“If you don’t have a lot of experience with corporate finance in general and venture debt in particular, then consider getting advice from a specialist,” Jung says. “With the help of an experienced advisor, you can be confident in choosing the right option and moving your company forward with the maximum chances of success. It’s important to remember that obtaining financing is only the beginning. Managing the finance post-funding is just as important.”

Business

13 Reasons Investors Are Watching Phoenix Energy’s Expansion in the Williston Basin

Published

7 days ago

April 23, 2025

Matthew Wiles

As energy security becomes a growing priority in the United States, companies focused on domestic oil production are gaining attention from investors. One such company is Phoenix Energy, an independent oil and gas company operating in the Williston Basin, a prolific oil-producing region spanning North Dakota and Montana.

Phoenix Energy has established itself as a key player in this sector, expanding its footprint while offering structured investment opportunities to accredited investors. Through Regulation D 506(c) corporate bonds, the company provides investment options with annual interest rates ranging from 9% to 13%.

Here are 13 reasons why Phoenix Energy is attracting investor interest in 2025:

1. U.S. energy production remains a strategic priority

The global energy landscape is evolving, with a renewed focus on domestic oil and gas production to enhance economic stability and reduce reliance on foreign energy sources. The Williston Basin, home to the Bakken and Three Forks formations, continues to play a critical role in meeting these demands. Phoenix Energy has established an operational footprint in the basin, where it is actively investing in development and production.

2. Investment opportunities with fixed annual interest rates

Phoenix Energy bonds offer accredited investors annual interest rates between 9% and 13% through Regulation D 506(c). These bonds help fund the company’s expansion in the Williston Basin, where it acquires and develops oil and gas assets.

3. Record-breaking drilling speeds in the Williston Basin

Phoenix Energy has made significant strides in drilling efficiency, ranking among the fastest drillers in the Bakken Formation as of late 2024. By reducing drilling times, the company aims to optimize operations and improve overall production performance.

4. Expansion of operational footprint

Since becoming an operator in September 2023, Phoenix Energy has grown rapidly. As of March 2025, the company has 53 wells drilled and 96 wells planned over the next 12 months.

5. Surpassing production expectations

Phoenix Energy’s oil production has steadily increased. By mid-2024, its cumulative production had exceeded 1.57 million barrels, outpacing its total output for 2023. The company projected an exit rate of nearly 20,000 barrels of oil equivalent per day by the end of March 2025.

6. High-net-worth investor offerings

For investors seeking alternative investments with higher-yield opportunities, Phoenix Energy offers the Adamantium bonds through Reg D 506(c), which provides corporate bonds with annual interest rates between 13% and 16%, with investment terms ranging from 5 to 11 years, and a minimum investment of $2 million.

7. Experienced team with industry-specific expertise

Phoenix Energy’s leadership and technical teams include professionals with decades of oil and gas experience, including backgrounds in drilling engineering, land acquisition, and reservoir analysis. This level of in-house expertise supports the company’s ability to evaluate acreage, manage operations, and execute its long-term development plans in the Williston Basin.

8. Focus on investor communication and understanding

Phoenix Energy prioritizes clear investor communication. The company hosts webinars and provides access to licensed professionals who walk investors through the business model and operations in the oil and gas sector. These efforts aim to help investors better understand how Phoenix Energy deploys capital across mineral acquisitions and operated wells.

9. Managing market risk through strategic planning

The energy sector is cyclical, and Phoenix Energy takes a structured approach to risk management. The company employs hedging strategies and asset-backed financing to help mitigate potential fluctuations in the oil market.

10. Commitment to compliance

Phoenix Energy conducts its bond offerings under the SEC’s Regulation D Rule 506(c) exemption. These offerings are made available exclusively to accredited investors and are facilitated through a registered broker-dealer to support adherence to federal securities laws. Investors can review applicable offering filings on the SEC’s EDGAR database.

11. Recognition for business practices

As of April 2025, Phoenix Energy maintains an A+ rating with the Better Business Bureau (BBB) and is a BBB-accredited business. The company has also earned strong ratings on investor review platforms such as Trustpilot and Google Reviews, where investors often highlight clear communication and transparency.

12. A family-founded business with a long-term vision

Led by CEO Adam Ferrari, Phoenix Energy operates as a family-founded business with a focus on long-term investment strategies. The company’s leadership emphasizes responsible growth and sustainable development in the Williston Basin.

13. Positioned for long-term growth in the oil sector

With U.S. energy demand projected to remain strong, Phoenix Energy is strategically positioned for continued expansion. The company’s focus on efficient drilling, financial discipline, and structured investment offerings aligns with its goal of building a resilient and growth-oriented business.

Final thoughts

For investors looking to gain exposure to the U.S. oil and gas sector, Phoenix Energy presents an opportunity to participate in a structured alternative investment backed by the company’s operational expansion in the Williston Basin.

Accredited investors interested in learning more can attend one of Phoenix Energy’s investor webinars, which are hosted daily throughout the week. These sessions provide insights into market trends, risk management strategies, and investment opportunities.

For more information, visit the Phoenix Energy website.

Phoenix Capital Group Holdings, LLC is now Phoenix Energy One, LLC, doing business as Phoenix Energy. The testimonials on review sites may not be representative of other investors not listed on the sites. The testimonials are no guarantee of future performance or success of the Company or a return on investment. Alternative investments are speculative, illiquid, and you may lose some or all of your investment. Securities are offered by Dalmore Group member FINRA/SIPC. Dalmore Group and Phoenix Energy are not affiliated. See full disclosures.

This article contains forward-looking statements based on our current expectations, assumptions, and beliefs about future events and market conditions. These statements, identifiable by terms such as “anticipate,” “believe,” “intend,” “may,” “expect,” “plan,” “should,” and similar expressions, involve risks and uncertainties that could cause actual results to differ materially. Factors that may impact these outcomes include changes in market conditions, regulatory developments, operational performance, and other risks described in our filings with the U.S. Securities and Exchange Commission. Forward-looking statements are not guarantees of future performance, and Phoenix Energy undertakes no obligation to update them except as required by law.