Venture debt is a loan for venture-backed companies, typically used alongside or shortly after an equity round to extend runway without selling more ownership.
Key takeaways
Venture debt is a loan for venture-backed companies, typically used alongside or shortly after an equity round to extend runway without selling more ownership. Lenders usually charge interest plus warrants (a small equity kicker) and expect repayment over a fixed term. It's growth capital you pay back, not dilution.
Venture debt can stretch runway between rounds or fund a specific push without the dilution of more equity, but it's still debt with interest, covenants, and a repayment schedule that eats into future cash. Founders should size it against realistic runway and revenue, since a loan that felt cheap can squeeze a company that misses plan.