Banking
Venture Debt
Quick definition
Debt financing for venture-backed startups, typically structured as a term loan with warrants — extends runway without immediate dilution.
Venture debt is term-loan financing (typically $1-50M) from specialized lenders (Silicon Valley Bank, Hercules Capital, Trinity Capital). Structured as: 3-4 year term, monthly interest payments (prime + 2-6%), 10-30% warrant coverage. Common after a Series A/B to extend runway without diluting further. Less risky than raising equity but introduces fixed obligations and covenants. Use for clear, financeable expansions (sales hires, marketing programs) rather than basic burn extension.
Related banking terms
Treasury Management
The discipline of managing a company's cash, liquidity, banking relationships, and short-term investments.
Sweep Account
Bank arrangement that automatically transfers excess cash from a checking account into a higher-yielding investment account.
FDIC Limits ($250K)
Federal Deposit Insurance Corporation insurance covers $250K per depositor per FDIC-insured bank per ownership category.
Money Market Fund
Mutual fund holding short-term, highly liquid debt (T-bills, commercial paper, repos) targeting stable $1/share value plus yield.
Frequently asked questions
- What is Venture Debt?
- Venture debt is term-loan financing (typically $1-50M) from specialized lenders (Silicon Valley Bank, Hercules Capital, Trinity Capital). Structured as: 3-4 year term, monthly interest payments (prime + 2-6%), 10-30% warrant coverage. Common after a Series A/B to extend runway without diluting further. Less risky than raising equity but introduces fixed obligations and covenants. Use for clear, financeable expansions (sales hires, marketing programs) rather than basic burn extension.
- Why is Venture Debt important for startups?
- Venture Debt is a banking concept that matters for startup founders because it directly affects fundraising readiness, financial decision-making, or operational discipline at the stage where mistakes are expensive to undo. Founders who understand it have a meaningfully easier time in diligence, board meetings, and investor conversations.
- What category does Venture Debt belong to?
- Venture Debt is a Banking term in the StartupCFO finance glossary — alongside other banking concepts that founders, CFOs, and accountants use in daily startup operations and reporting.
- Where can I learn more about Venture Debt?
- Beyond this definition, see the related banking terms below, or explore StartupCFO's insights and tools that put Venture Debt in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
Got a finance question that needs more than a definition?
Talk to a real CFO. 30 minutes, no contract, free.
