What is venture debt?

How it works

• Sized as a fraction of the last equity round or forward revenue, not EBITDA.
• Usually includes warrants (small equity coverage) on top of interest.
• Covenants are light; the lender's real collateral is the next round.

When borrowers use it

• Extending runway 6–12 months to hit a better valuation at the next round.
• Funding a specific milestone (launch, regulatory step, expansion) between rounds.

Related terms

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