What is Venture Debt?
Venture debt is a form of debt financing provided to venture-backed startups, typically alongside or after an equity round. It gives companies non-dilutive capital to extend runway or fund working capital without a new equity valuation.
Venture debt is issued by specialized lenders — often banks with dedicated venture practices or independent VC debt funds — to companies that have raised institutional VC equity but lack the cash flows required for traditional bank loans. Terms typically include a loan plus warrants, giving lenders some equity upside.
For startups, venture debt extends runway between equity rounds without diluting founders and existing investors. For lenders, warrant coverage and fees provide returns beyond the interest rate.
Also known as: growth debt, VC debt