What is venture debt?

Venture debt is a loan made to a venture-backed startup, typically alongside or shortly after an equity round, sized at roughly 20–35% of the round. It is serviced from the company's cash rather than profits, and lenders underwrite the company's investors and growth rather than collateral in the traditional sense.

Founders use it to extend runway without additional dilution; the cost is interest, fees, and warrants (small equity kickers for the lender). It suits companies with predictable spend on a clear path to the next milestone — and can be dangerous for companies whose next equity round is uncertain, since covenants and repayment come due regardless.