92.4
Concept
Venture debt
Venture debt is a loan to a venture-backed company that is usually still burning cash. Lenders underwrite the probability of the next equity round, not EBITDA. It is senior and secured, does not convert, and usually includes a small warrant — useful runway if the equity story still holds.
Where founders get this wrong
- Treating venture debt as 'cheap capital' without modeling covenants, security, and warrant dilution.
- Drawing debt when the next equity round is unclear — lenders price that risk into control terms.
- Ignoring how debt sits ahead of common on a soft exit or restructuring.
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