All terms
Investment & FinanceStartup Lifecycle
Venture Debt
Loan made to a venture-backed company, usually alongside or after equity.
Reviewed by Christian Espinosa, Founder, Blue Goat CyberLast reviewed May 5, 2026
Definition
Venture debt is term debt provided by specialty lenders (SVB, Hercules, Trinity, Western Alliance) to venture-backed companies, typically sized at 25–35% of the most recent equity round, with warrants attached.What this means in practice
Useful to extend runway between rounds without dilution. Risky if the company misses milestones - covenants and material adverse change clauses can accelerate repayment when cash is tight. Common pitfalls
- •Drawing the full facility just because it's available, then carrying expensive debt without a clear use.
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409A Valuation
An independent fair-market-value appraisal of common stock used to set tax-compliant strike prices for employee stock options.
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Anti-Dilution Protection
Adjustment that protects investors if the company raises a future round at a lower price.
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Bridge Round
Interim financing between priced rounds, usually convertible.
Investment & Finance
Burn Rate
Rate at which a company spends cash, typically expressed monthly.
Primary references
3 sourcesLink health: 3 verified· last checked 2026-06-20
SVB·2NVCA·1
- 1
SVB: venture debtVerifiedSVBsvb.com
- 2
NVCA Model DocumentsVerifiedNVCAnvca.org
- 3
Silicon Valley Bank - Healthcare ReportsVerifiedSVBsvb.com
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