venture debt
Venture debt or venture lending (related: “venture leasing”) is a type of debt financing provided to venture-backed deals that are startup, risky deals, lack credit or non-bank deals to fund startup capital, first round or second round capital, working capital or expansion capital, purchasing equipment, etc. Venture debt can complement venture capital and provide value to fast growing companies and their investors. Unlike traditional bank lending, venture debt is available to startups and growth companies that do not have positive cash flows or significant assets to use as collateral. Venture debt providers combine their loans with warrants, or rights to purchase equity, to compensate for the higher risk of default.
