Venture debt (UK)

A repayable facility used by venture-backed startups to extend runway between equity rounds without raising again immediately.

Most founders use venture debt when they want runway without a new equity round.

Venture debt can be powerful, but only when your repayment risk is genuinely manageable and your fundraising plan is clear.

See UK providers

Venture debt typically sits next to equity rather than replacing it. Lenders often underwrite based on your venture backing, growth trajectory, and fundraising dynamics. The goal is usually simple: extend runway, hit milestones, and raise the next round from a stronger position.

At a glance

Best for	Venture-backed startups extending runway between rounds without raising equity immediately
Most common use	Runway extension, hiring, growth spend, bridging to next equity round
Typical ticket size	Often £250k to £20m+ depending on round size, investors, and scale
Speed	Can be fast if investor backing and metrics are strong
Collateral / guarantees	Usually not personal guarantees, but covenants and security terms vary
Trade-off	Non-dilutive runway, but increased financial obligations and sometimes warrants

Note: venture debt terms vary widely. Always confirm covenants, warrant coverage, drawdown rules, and repayment schedule.

When venture debt is not the best fit

You are pre-revenue

If you are early-stage and pre-revenue, public and regional startup loans are usually more relevant.

You have predictable revenue and no equity round

If your business is revenue-driven, RBF can sometimes be a cleaner fit than venture debt.

You need asset-backed funding

If funding is tied to equipment or infrastructure, asset finance can be more suitable.

Venture debt providers

A practical starting list. As you expand this, focus on eligibility, warrants, covenants, and drawdown rules.

Post-roundRunwaySometimes warrants

Provider	Region	Typical ticket	Stage	Needs revenue	Notes
Venture debt lenders (UK and Europe)	UK / Europe	£250k to £20m+ (depends on equity backing and scale)	Seed to Series B+	Often (but not always)	Commonly raised alongside or after an equity round. May include warrants or covenants.
Debt finance arms of venture platforms	UK	Varies	Seed to growth	Sometimes	May follow VC relationships and focus on venture-backed companies.
Innovation banking teams	UK	Varies	Venture-backed growth	Often	Facilities often connected to banking products, covenants, and portfolio profile.

As you add providers, include: warrant coverage (if any), covenants, drawdown rules, and how facilities interact with future fundraising.

Real examples from Startupmag

Real stories help founders understand how venture debt is used in practice.

HR Guru used Mercia debt finance to extend runway after raising

Example: venture-style debt used to bridge time between rounds.

Read the story

Solidatus raised growth financing from Salica Investments

Example: structured / growth credit style financing (often venture debt adjacent).

Read the story

FAQs

What is venture debt?

Venture debt is a loan designed for venture-backed startups, typically raised alongside or after an equity round. It is often used to extend runway without raising another round immediately.

Does venture debt include warrants?

Sometimes. Some facilities include warrants or other equity-linked features, while others do not. It depends on the lender, the risk profile, and the negotiating position of the company.

When should a startup avoid venture debt?

Avoid venture debt if you cannot confidently service repayments, if your fundraising timeline is uncertain, or if you would be forced into a down round because debt changed your risk profile.

Is venture debt the same as a bank loan?

Not usually. Venture debt underwriting often relies on venture backing, growth trajectory, and equity round dynamics rather than traditional profitability-based bank criteria.

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