Top Corner Capital: Rethinking Venture Debt for the Seed Stage

The case follows two entrepreneurs—Patrick Lee, founder and managing partner of a newly established venture debt fund, and Ajay Singh, founder and chief executive of a startup developing automated root-cause analysis for software systems—as they navigate a Seed-stage venture debt transaction from the lender and borrower perspectives. The case examines the venture debt fund’s investment decision framework and deal economics, including interest, warrant coverage, and equity participation, and how these elements balance fixed-income returns with potential equity upside. From the borrower’s perspective, the case explores how the startup evaluates alternative sources of financing, weighing equity dilution and governance constraints against the cost of debt and the value of additional runway to pursue more ambitious milestones. The case also contrasts bank and non-bank venture debt providers, compares their respective deal terms, and situates Seed-stage venture debt within the broader early-stage startup financing landscape.