Arc Learning Center

Venture debt is a popular financing option for startups thanks to its flexible nature, yet it comes with significant risks. In this guide, we break down the common pitfalls and “gotchas” and provide strategies that you can use to avoid them so you can maximize your next raise.

Running a tight venture debt process is crucial for securing favorable terms. In this guide, we break down the venture debt factors and components to consider, a framework that you can use to negotiate from a position of strength, and the strategies that you should implement to maximize your next raise.

Venture debt can be one of the most effective forms of capital to grow a startup, as it typically comes with a lengthy amortization schedule (usually 36-48 months), an interest-only period, and relatively minimal dilution (e.g. warrants). However, it can also be incredibly dangerous to cash-burning startups with dynamic business models and fluctuating cash flows (e.g. most startups). In this guide, we break down the covenants, clauses, and provisions to avoid so you can minimize the downside risks associated with taking on venture debt!

Qualifying for venture debt from traditional providers, often depended on three factors: who your backers were, how much capital you had raised, and how long it had been since your last raise—that's changed. In this guide, we break down the typical set of eligibility criteria in 2023, as well as the hard requirements of most lenders. We also provide tips on how to can maximize the likelihood that you qualify for venture debt and some frequently asked questions related to qualifying for venture debt.

In the world of startup financing, finding the right capital mix is paramount to fostering growth within an organization. Among the various funding options, debt stands as one of the more popular. In this guide, we shed light on the differences between senior, subordinated, and venture debt, the ideal use cases and the associated risks of each, and more.

If you're mid-raise or about to kick off a venture debt process there are some things you should know. In this guide, we provide tips to help you get the most out of your raise, so you can secure the ideal outcome for your startup. A few of the things we cover include when to raise (and not to raise) venture debt, the ideal uses of venture debt (and in which scenarios other forms of debt financing are a better option), and how to run a structured venture debt process.

The funding landscape of 2023 has been turbulent, especially in the aftermath of Silicon Valley Bank's (SVB) collapse. In this session of Collision Conf, the panelists offer profound insights into the current economic climate, where startups face unprecedented challenges in securing funding amidst rising interest rates and shrinking venture capital funding.

Building a repeatable sales process is easier said than done, but our friends at Vouris want to help! In this webinar recording, we share a framework to help you supercharge your sales efforts. 

Regional banks and systemically important banks both serve an important role in the stability of the banking system. Regional banks are the backbone of the economy, while systemically important, or “too big to fail” banks, control the majority of the assets in the banking sector. In this guide, we break down how deposits are safeguarded,  how the underlying banks that Fintechs are built on top of affect the relative safety of their deposits, and why we suspect that Fintechs may choose to build on top of systematically important, or “too big to fail banks” in the near future.

Banks intentionally seem to overcomplicate just about everything they do. They use jargon, they minimize all their disclosures (you know, the little text below every claim they make), and they advertise inflated yield (that founders never actually receive). It's opaque and hard to understand. In this webinar, we break down how banks work and how they make money. We then delve into the role of fintech neobanks and how they’re disrupting the industry. In the final minutes, we share the shocking truths the big banks don’t want you to know and provide tips for safeguarding more of your cash and getting the most from your bank partner.

Banks rely on deposits for every aspect of their operations. Without deposits banks fail. Without new deposits, banks also fail, and it's a much slower and more painful process. Earlier this year we experienced a black swan event, the failure of two major banks. We’re currently experiencing the failure of yet another due to major deposit outflows and concern over the bank’s ability to meet its obligations. In this guide, we cover why deposits matter so much to banks, what happens to a bank’s operations when deposits dry up, and where the deposits go during a bank run.

Fintechs are not banks—we think that’s a good thing. In this guide, we cover the differences between traditional banks, neobanks, and Fintechs. We go over how funds are protected, the specific safeguards that are in place, where the money goes, and ultimately who is responsible. We also cover how Fintechs can offer banking services to startups, why Fintechs can offer higher FDIC coverage than traditional banks and a whole lot more!v

There's a whole lot more to preparing for tax season than meets the eye. In this session, we share a broad overview of the forms that you'll need to file, the IRS tax credits that may be applicable to your startup, the tax deadlines, and much much more.

The reality is that the return on most investments, including T-Bills, varies from day to day, week to week, and month to month. In the US, we operate in a free market, which means that every second of the day there is a systematic repricing of risk and thus yield. In this post, we explore the market dynamics that cause the headline yield on TBills to fluctuate and share tips to help you minimize these fluctuations.

Startups that park their cash with banks earn yield, but why? The short answer is that banks take the cash and invest it in a variety of vehicles, securities, investments, and more. By doing so, they generate a return, some of which they pass back to you in the form of yield. 

DACAs are essential for protecting the interests of both lenders and startup borrowers. They ensure that everyone is in alignment and understands the consequences of a default event, and are often used alongside tranches, which enable lenders to split a single capital injection into multiple pieces based on milestones. In this post, we cover the basics of deposit account control agreements, as well as the related key elements and terms.

Fixed-income securities generate predictable and recurring returns, are less volatile compared to stocks and other securities, and some are even backed by the U.S. Treasury which makes them effectively “risk-free” when held to maturity. In this post, we cover all the basics of fixed-income securities: what they are, how they work, and what types exist, then we dive into some of the benefits and drawbacks, and finally, we cover how they fit into startups’ treasury management strategy.

Credit default swaps are a common way for investors to hedge their risk on debt securities. By buying a swap, an investor effectively insurers their position against a default. Normally a technique used by private credit investors and banks, it’s become an increasingly common tool for US Treasury bill holders in the face of growing uncertainty. 

If you’re reading this guide, we’re going to assume that you’re already well down the rabbit hole of T-bill ladders. You probably have a basic understanding of what they are and how they work, if that’s not the case, get up to speed in ~2mins with this guide on treasury bill ladders. 

Treasury management has transitioned from a “waste of time” to an “existential need” over the past year, especially so in these last few weeks. One critical part of that strategy is capital allocation across both account types and asset classes. With the coupon rate on T-bills quickly approaching 5.00%+ APY, and the Federal Reserve pushing for more rate hikes throughout 2023, we expect the lion’s share of startups' excess cash to go into T-bills. But why? And why are T-bills so important to startups’ treasury management strategy? We cover answers to these questions and more in this post.

FDIC insurance coverage wasn’t on the mind of most founders until SVB collapsed in March 2023 and their deposits were at risk. Had Federal regulators not stepped in, depositors with balances over $250k would’ve lost the excess cash. Since the bank’s collapse, Fintechs have been locked in an arms race to increase their FDIC coverage by partnering with and sweeping their customer deposits across other banks.

A few months back, we wrote about the impact of rising rates on startup valuations. Since then we’ve received a ton of requests from founders asking about the impact of rising interest rates on bond yields and subsequently the overall cost of capital. In this guide, we break down the various bond yield curves, the impact of interest rates and monetary policy on those yield curves, and ultimately how interest rates and bond yields affect the cost of capital.

Some of the founders we talk to these days are concerned with their capital's relative safety and security in both traditional banks and neo-banks alike. While checks and balances often slow down processes, they play a significant role in the reduction of risk, fraud, and other financial crimes. This guide breaks down the major banking regulations that governing today's financial system. 
 

Given you’re reading this article, you’re probably evaluating T-bill ladders to maximize the yield on your idle cash—know that you’re not alone.  In this guide, we break down what treasury bill ladders are, how they work, how to structure them, and how they compare to other yield-bearing accounts like money market funds and high-interest savings accounts.

APR, APY, and interest rates are often used interchangeably to talk about financial accounts, they shouldn’t be. While they are indeed similar, the outcome is not, it’s like comparing “apples to oranges”.

Banks serve as the fundamental building block of the global economy and the modern financial system. They take in and store deposits, facilitate transfers in and out, lend out money to growing startups and small businesses and track changes to balances in real-time. 

As technology advances, banks are no longer the only way to manage money, and the introduction of neobanks is quickly revolutionizing the banking industry. But what exactly is a neobank, and what makes it different from a traditional bank?

We often get asked about the role of treasury management in this process, and how founders without robust finance teams can duplicate the results of a full-fledged treasury management program. In this guide, we break down the basics of treasury management, highlight tips for setting up effective treasury management programs with limited resources, and the evolution of treasury management programs throughout the lifecycle of a startup.

In this article you’ll find a detailed breakdown of the most common banking fees: what they are, what they’re for, and what the average charge is. We round out the post by comparing the fee structure across five of the largest traditional banks. 

Choosing a primary bank may not seem like an important decision at the time, but trust us, it is. The right bank will help set your startup up for early success. Here are 15 banking features to keep an eye out for when evaluating banking partners. 

If you’re like most of the founders and heads of finance we talk to these days who have recently raised a seed or Series A, you’re looking for a place to park your idle cash. You’ve likely explored a slew of different accounts such as money market accounts, money market funds, checking, and savings, all of which have different yields, minimums, fees, coverage, and more.

As we’re sure you’re aware, moving money in and out of accounts and between banks to process payroll, pay vendors and contractors, and maximize the return on idle funds, is one of the most important (and often overlooked) functions of a modern finance team. While there are a ton of rails on which money can move, ACH, RTP, and Wire Transfers are the most common.

After you raise your first checks, through a SAFE, pre-seed, or friends and family round, your first question will likely be “where do I put this”? Of course, you want to keep it safe, so you’ll decide to put it in a bank, but what bank: the bank where you keep your own money, like Chase or Well Fargo, or a bank that’s built for startups? Below we break down the basics of SIPC vs FDIC coverage so you can make a better-informed decision for your startup.