The Concept of Venture Debt

Venture debt is primarily a form of debt financing from specialist lenders to pre-profit venture-backed companies with an established business model and clear growth prospects. These emerging companies often view debt financing as a means to augment their cash position without having to give up as significant a portion of their ownership as required by additional equity financing.

It should be noted that venture debt is complementary and not a replacement for early stage equity. It is a form of risk capital with typically a lower cost than equity when structured and deployed properly.