Fundraising
Venture Debt
Debt financing for VC-backed startups, typically structured as a term loan with warrants, used to extend runway without additional equity dilution.
Venture debt is a form of debt financing specifically designed for venture-backed startups. Unlike traditional bank loans (which require profitable businesses and significant collateral), venture debt is extended based on the startup's VC backing and growth trajectory. Common structures: term loans with 12-36 month repayment periods, equipment financing, or revolving credit facilities. Lenders typically also receive warrants (the right to buy equity at a fixed price) as additional compensation for the elevated risk. Major venture lenders include Silicon Valley Bank (before its collapse), Western Technology Investment, Hercules Capital, and Runway Growth Capital. Venture debt is attractive for founders because it provides capital without dilution. The risk: it's real debt — if the company can't repay, lenders have seniority over equity holders.