Cambridge Business Association
What Is Venture Debt?
Report

What Is Venture Debt?

CB Insights
CB Insights, 2020
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Editorial Rating

7

Qualities

  • Innovative
  • Overview
  • Background

Recommendation

A new type of financing, venture debt, is gaining popularity with start-up firms. Investors lend them capital, imposing less stringent requirements than those of a conventional bank loan. The appeal for company founders is their ability to retain ownership without sacrificing valuable equity. In this incisive overview, professionals at CB Insights explore venture debt, its pros and cons, differences from venture capital, and future direction. Entrepreneurs, executives and investors will discover some keen insights in this smart report.

Summary

Venture capital trades cash for an ownership position in a start-up company; venture debt provides loans with little to no equity transfer.

New businesses need capital to grow their enterprises, meet performance targets and respond to unexpected contingencies. Venture capital firms are a primary source of funds for new companies in exchange for equity stakes. But start-ups sometimes need cash between rounds of equity funding; they want to raise more capital quickly without a significant additional drain on equity.

Venture debt is supplemental to and dependent on already secured VC financing, and it is available...

About the Author

CB Insights is a technology consulting and market intelligence firm. 

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