Venture Debt
Definition
Venture debt is a loan to a venture-backed startup, typically sized against the last equity round and repaid over three to four years, usually with small equity warrants attached.
How it comes up in fundraising
Founders layer venture debt onto an equity round to extend runway 20 to 30 percent with minimal dilution.
Frequently asked questions
When is venture debt a good idea?
Right after a strong equity round, as insurance runway toward clear milestones; it is dangerous as a substitute for equity a company cannot raise.
What are the risks?
Covenants and repayment obligations bind in downturns exactly when cash is tight; a lender’s remedies can force bad outcomes.
Related terms
Put this term to work
Definitions win negotiations only when you are in one. Find the investors who fund your stage and start the conversation.
Browse the investor database