US venture debt raised in 2025, an all-time record
0.5-2% dilution only
25-35%
Typical loan size as a share of your last equity round
10-13.5%
All-in interest rate from most lenders in 2025
4-8 weeks
From first lender conversation to money in the bank
The median US venture debt deal hit $5.5M in 2025, with warrants of 0.5-2% and terms of 2-4 years.
The honest founder's guide
What Is Venture Debt?
Venture debt is a term loan for VC-backed startups, typically sized at 25-35% of your last equity round and repaid over 2-4 years after an interest-only period of 6-12 months. Lenders underwrite your ability to raise the next round, not your assets or your cash flow. In exchange they earn 10-13.5% all-in interest plus warrants over 0.5-2% of your equity: real money, but a fraction of what an equity round costs in dilution.
The market is large and growing: US startups raised a record $68.8B of venture debt in 2025 across roughly 1,000 deals, according to the Runway Growth and PitchBook Venture Debt Review. Europe is harder to pin down: Atomico's State of European Tech 2025 counts $5.6B, a record 12.7% of all funds raised, while Sifted reported €7.1B in the first half of 2025, down sharply year on year. One rule cuts through everything: debt follows equity. If you are not VC-backed, revenue-based financing is your route instead.
Use cases
When Venture Debt Makes Sense
Venture debt is a tool for specific jobs, not general fuel. Five scenarios justify the cost; everything else is usually a sign to raise equity or wait.
Runway Extension
The classic use case. Add 3-9 months of runway so you cross the metrics that price your next round higher, without touching your cap table today.
3-9 extra months to hit milestones
Sized off your last round, typically 25-35% of it
6-12 months interest-only keeps early payments low
Next round priced on stronger numbers
Typical sizing25–35% of last round
Round Insurance Alongside Fresh Equity
Raise the debt concurrently with a fresh equity round, or within roughly 3 months of closing it, when your leverage with lenders is at its peak.
Strongest terms at or just after your equity close
Drawn in tranches: no interest until you use it
Unused line fees of only 0.5-1%
Blending $2M of debt into a $6M raise saves roughly 3-5 points of dilution (illustrative)
Best windowAt close to +3 months
Bridge to a Known Milestone
When Series B, profitability, or an M&A close is visible but not yet banked, debt carries you there without a punitive insider bridge.
Bridge to Series B, profitability, or an M&A close
Cheaper than a bridge round at a flat valuation
Works only when the milestone is specific and dated
Never a substitute for a round you cannot raise
Typical term2–4 years
Equipment & CapEx Financing
Hardware, lab kit, and infrastructure financed against the asset itself, keeping your equity for what compounds: team and product.
Equipment financing of $3M-$30M from lenders like Trinity Capital
Equipment leases from $10K via TriplePoint
Also covers inventory and CapEx-heavy scaling
Equipment lines$3M–$30M
Acquisitions Without Dilution
Debt-funded M&A lets you buy revenue or technology without issuing new shares. Debt-backed companies drove 37% of US exit value in 2025.
Fund acquisitions with zero new dilution
Growth-stage checks up to $100M+ from the big BDCs
Combine with equity for larger deals
Deal checksUp to $100M+
Want to know how much venture debt your startup could raise?Register free and we'll match you with the right lenders, and with the investors whose round unlocks them. Lenders underwrite your syndicate, so both halves matter.
Venture debt lenders underwrite your next equity round, not your balance sheet. Here is what they need to see before a term sheet appears.
A completed institutional Series A. Venture debt follows equity. Lenders want an institutional VC round closed within the last 12-18 months; Series A is the practical minimum, and terms are best right at or just after the close.
$1M+ ARR if you sell software. For SaaS companies, most lenders want at least $1M in annual recurring revenue as evidence the machine works, even though the loan is not underwritten on cash flow.
6+ months of post-loan runway. The loan should extend a healthy runway, not replace a dead one. Lenders model your cash position after debt service and want at least six months of headroom beyond it.
A strong investor syndicate. Lenders underwrite your VCs as much as your company: fund size, reserves, and their track record of following on. A committed, deep-pocketed syndicate is half the credit decision.
Comfortable covenant headroom. Expect reporting within 30 days, minimum cash balances, ARR milestones, and consent rights over new debt. Only borrow if you can hold those covenants with buffer; debt service above roughly 20% of operating expenses is a warning sign.
The red flag: less than 12 months of runway. Raising venture debt as a lifeline rather than a tool is the classic mistake. Lenders read desperation in the numbers, terms get worse, and a default means acceleration, asset seizure, or a forced sale.
The real cost
Venture Debt Rates & How It Compares
Cash interest is only part of the price: fees, end-of-term payments, and warrants all stack on top. Here is how venture debt compares with the main alternatives.
What you're comparing
Venture debt
Revenue-based financing
Bank loan
Convertible note
Who qualifiesStage & backing
✓VC-backed, post-Series A
~$15K+ MRR, no VC needed
~Profitable or asset-rich, 2+ years
~Early stage with investor interest
All-in cost2025 norms
~10-15% + 1-2% fees + 3-6% end-of-term
~Effective APR 10-25%+
✓Prime-based, cheapest
~4-8% accrued, converts at discount or cap
DilutionEquity given up
✓Warrants of 0.5-2%
✓None
✓None
~Full conversion at next round
RepaymentHow it flexes
~Fixed schedule after interest-only period
✓% of monthly revenue, flexes with sales
~Fixed
✓Usually converts, no cash repayment
CollateralWhat's pledged
~Blanket lien, sometimes IP
✓Usually none
~Assets, often a personal guarantee
✓None
SpeedTo funds in bank
~4-8 weeks
✓Days to 4 weeks
~Slow
✓Fast, often days
A founder's guide
How to Raise Venture Debt
The full process runs 4-8 weeks for most companies. Timing and competition decide your terms more than anything you negotiate later.
Weeks 1–3
Time It Right
Approach lenders while you are closing an equity round or within roughly 3 months after: that is when your leverage peaks and terms are best. Need the equity side first? Browse our investor database to close the round that unlocks the debt. Weeks 1-3 cover lender screening and first conversations.
Weeks 3–4
Run a Competitive Process
Get 2-3 term sheets, not one. Competition is the only real lever for trading warrant coverage against rate against covenants. Signing a term sheet usually comes with a non-refundable deposit, applied to the lender's diligence and legal costs.
Weeks 4–6
Diligence and Documentation
Prepare a financial model, board deck, cap table, last round documents, KPIs (ARR, burn, runway), and bank statements. Expect the lender to diligence your investors too: their reserves and appetite for your next round are half the credit decision.
Weeks 6–9
Negotiate and Close
The most negotiable terms are the interest-only period, warrant coverage, covenants, and fees; a blanket lien is standard and rarely moves. Watch for MAC and investor-abandonment clauses, and a prepayment penalty stepping down 3%/2%/1% over years 1-3. Terms drifting between term sheet and final docs is a bad lender signal. Expect a 1-2% upfront fee at closing, with funds landing 1-2 weeks after docs are signed.
Who lends
Venture Debt Lenders to Know
The market splits into specialist funds and BDCs, banks that rebuilt the SVB playbook after March 2023, and dedicated European lenders. These are informational references, not endorsements: run your own process and collect multiple term sheets.
Category
US Venture Debt Funds & BDCs
The core of the market. Debt funds and public BDCs price above banks but stretch further on check size, structure, and risk. They filled the gap SVB left and now write the biggest checks.
Hercules CapitalLargest non-bank venture lender: $27B+ committed to 700+ companies since 2003. Checks $5M to $500M across tech and life sciences.
TriplePoint CapitalFull-lifecycle lender, $5B+ to 500+ companies. Loans from $10K to $100M, including equipment leases.
Trinity CapitalGrowth-stage venture debt up to $100M, plus equipment financing of $3M to $30M.
Horizon Technology FinanceVenture loans up to roughly $35M with a $5M to $25M sweet spot, on 3 to 5 year terms.
Runway Growth CapitalLate and growth-stage senior term loans of $10M to $150M. Publishes the annual PitchBook Venture Debt Review.
Category
Banks Lending to Startups
Banks price below the funds but hold tighter credit boxes and smaller checks. After SVB collapsed holding roughly $6.7B of venture debt, these three rebuilt the model fastest.
JPMorgan (Innovation Economy)The post-First Republic push to become the new SVB: roughly 12,000 startup clients and 550 dedicated bankers.
HSBC Innovation BankingAcquired SVB UK in March 2023. Venture debt for Series A-C companies across the UK, US, EU, Israel, and Hong Kong; repayment typically 33-36 months.
Stifel Venture BankingBuilt with ex-SVB bankers: 100+ bankers and $10B+ in loan commitments. Publishes a founder-facing dilution calculator.
Category
European Venture Debt
Europe's market has consolidated around a handful of dedicated funds, led by the region's largest player, with typical pricing of EURIBOR plus 5-8 points.
Kreos Capital (BlackRock)Europe's largest: €7B+ committed across 830+ transactions and 640+ companies, deploying €800M+ per year.
Claret Capital PartnersLondon-based. Loans of €1M to €50M over 3 to 5 years; €132M committed in 2024 at an average deal of roughly €4M.
Atempo GrowthLondon-based, Santander-backed. Tickets of €3M to €10M from Series A through to IPO; Fund II first close of €300M.
Flashpoint Venture DebtPost-Series A software specialist with tickets of $5M to $15M.
Keep exploring
Related Debt Financing Guides
Venture debt is one branch of the debt stack. If you are earlier-stage or not VC-backed, these guides cover the routes that fit.
Revenue-Based Financing
Non-dilutive capital repaid as a share of monthly revenue: no warrants, no covenants, funds in days. The main debt route for companies with recurring revenue but no VC backing.
Government-backed loans of up to £25K per founder at a fixed 7.5%, with free mentoring included. Built for pre-revenue UK founders, long before venture debt is on the table.
SBA 7(a) loans up to $5M and microloans up to $50K, government-guaranteed and priced well below venture lenders. The route for US startups with revenue but no institutional round.
Venture debt is a term loan for VC-backed startups, typically sized at 25-35% of your last equity round and repaid over 2-4 years after a 6-12 month interest-only period. The lender underwrites your ability to raise the next round rather than your cash flow, and earns interest plus small warrants over your equity. Capital is often drawn in tranches after closing, with no interest until drawn.
Only minimally. Lenders take warrants over 0.5-2% of your fully diluted equity (banks usually 1-2%, debt funds sometimes up to 2-5%), struck at your last round price. Compare that with the 10-25% a typical equity round costs, and the appeal is obvious: for a $3M need at a $30M pre-money, an equity round costs 9.1% versus roughly 1% via warrants (illustrative).
Rates float over SOFR with a spread of roughly 4-9 points, putting the all-in rate at 10-13.5% for most fund deals in 2025, within a full market range of 8-15%. Banks price lower than debt funds. In Europe, pricing runs EURIBOR plus 5-8 points, all-in roughly 7-13%. On top of cash interest, budget for a 1-2% upfront fee, a 3-6% end-of-term fee, and warrants.
Effectively yes. Lenders underwrite your investors' willingness and capacity to fund your next round, so a completed institutional round, ideally within the last 12-18 months, is the practical entry ticket. Bootstrapped companies rarely qualify: if that's you, revenue-based financing is the non-dilutive alternative built for companies without VC backing.
The lender can accelerate the loan, apply penalty rates, and seize assets under the blanket lien that secures nearly every deal, up to and including a forced sale or liquidation. This is why lenders (and this guide) insist on 6+ months of post-loan runway and covenant headroom before you borrow: venture debt punishes companies that treat it as rescue financing.
Usually, if you hit plan. The total cost typically lands around 15-25% of principal over the term, versus permanently giving up 10-20% of your company in an equity round. The counterweights: debt must be repaid regardless of performance, it sits senior to preferred shareholders, and after interest and fees your net usable capital can be only around 71% of the face amount. Cheaper, yes; free, no.
At or just after closing an equity round, with 12+ months of runway and specific milestones the extra capital will fund. That is when lenders compete hardest and terms are best. The wrong time is when runway is short and the debt is a lifeline: terms worsen, covenants tighten, and the downside of a stumble becomes existential rather than uncomfortable.
Debt Is One Path. Here Is the Full Picture.
Debt financing works best as part of a funding stack. The strongest startups combine non-dilutive capital (grants + debt) with equity investment from angels, VCs, and family offices.
AngelsPartners is the only platform where a founder can access all three capital pathways in one place: grants, debt information, and 100,000+ equity investor profiles with live reply-rate data.
Equity funding
100,000+ Equity Investors
The largest searchable database of angels, VCs, family offices, and corporate investors on one platform. Filter by sector, geography, ticket size, and stage. Direct contact details included - no gatekeepers, no pay-to-pitch.
Once you submit your profile, our AI scans grant programmes across the UK, US, and EU to find programmes that match your sector, stage, and geography. Zero dilution, no repayment obligations.
UK, US, and EU grant programmes covered
R&D tax credits, innovation loans, and challenge prizes
