Drive By Deal
Drive By Deal Meaning:
In venture capital terminology, the term Drive-By Deal refers to a Venture Capital situation in which the Venture Capitalist will invest in a start-up company with the goal of getting out as soon as possible.
In venture capital terminology, the term Drive-By Deal refers to a Venture Capital situation in which the Venture Capitalist will invest in a start-up company with the goal of getting out as soon as possible.
For example, in a typical Drive-by Deal situation, a start-up company may be desperately looking for venture capital with a deadline to meet in order to lock in the price of materials. This start-up has the potential for an Initial Public Offering or IPO in the future, and this fact is made known to Venture Capitalist companies. A Drive-By Deal then takes place when a venture capital firm or venture capitalist invests a sum of money in the firm with the idea of getting paid back as soon as the company has their IPO. Often the IPO will be forced ahead of its original schedule in order to pay back the Drive-By Deal financing quickly.