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PitchBook Analyst Note: Venture Debt as the Market Turns

Q1 2023

PitchBook Analyst Note: Venture Debt as the Market Turns

March 9, 2023

Startups turn to venture debt as a major lender stumbles  

The struggles of Silicon Valley Bank shook the venture market yesterday with the news of the bank’s share sale to cover large losses to its bond portfolio. The bank is one of the largest participants in the venture debt space, providing loans to many startups within the tech and life sciences sectors.   

Venture debt has grown significantly in recent years, building alongside the growth of the VC market as lenders were able to offer a relatively cheap, nondilutive source of growth capital to startups due to low interest rates. Though the market shifted quickly in 2022, more than $30 billion in loans were provided to US-based VC-backed companies, which showed an appetite for debt despite rising interest rates.  

Our latest analyst note explores trends in venture debt dealmaking amid a difficult market and highlights the unique opportunities and challenges of nondilutive capital.

Table of contents
Key takeaways 1
Introduction 2
Macro market shifts 2
Venture market shifts 4
Venture debt market changes 6
Challenges and opportunities for venture debt in the current climate 9
Looking forward 11