Venture debt growth reaching all areas of VC market
March 22, 2021
Equity financing is among the most expensive forms of capital. Selling an early stake for a few hundred thousand dollars can cost a company millions when it exits.
Debt, on the other hand, can be cheap. The venture debt market has boomed, with VC-backed companies taking on more than $80 billion in loans and other debt products over the past three years, according to our latest analyst note. Key takeaways include:
Debt, on the other hand, can be cheap. The venture debt market has boomed, with VC-backed companies taking on more than $80 billion in loans and other debt products over the past three years, according to our latest analyst note. Key takeaways include:
- Debt is growing faster than the broader VC market, reaching a record value of $28.2 billion in 2019 and nearly matching that in 2020.
- Last year, venture-backed companies used debt products nearly 3,000 times, often in tandem with equity funding.
- The largest proportion of venture debt goes to tech companies, who borrowed nearly $18 billion in 2020.