Venture debt

Loans to venture-backed companies, often alongside an equity round, that dilute owners less than raising the same amount as equity.

Checked 9 Oct 2026 · 2 sources

What is venture debt?

Venture debt is lending to companies that have raised money from venture capital investors, typically as a complement to equity rounds. It dilutes owners less than raising the same amount as equity, though lenders usually receive warrants. Unlike equity, it must be repaid, and it comes with covenants and default triggers that can let the lender demand repayment early.

Why it matters to a revenue leader

Venture debt extends runway while selling less of the company than an equity round would, which makes it attractive when revenue is growing. The risk is that repayment assumes the plan is delivered. Missed payments, broken covenants or a material adverse change clause can give the lender a say in the company's choices, so a missed sales plan can quickly become a debt problem.

Example

Fictitious numbers

After a $20 million Series B, a company borrows $8 million of venture debt, adding 10 months of runway. The lender receives warrants and requires its approval before any further borrowing. When two quarters miss plan, the CFO's first meeting is with the lender.

The question to ask

"What does our venture debt require of us, and which sales results could put us in a conversation with the lender?"

Sources

  1. Venture Debt 101: Basics and Approach checked 9 Oct 2026
  2. Venture Debt - Overview, Breakdown, and How It Works checked 9 Oct 2026

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