with Hemal Fraser-Rawal, General Partner at White Star Capital
EUVC Academy · 1h 4m · Fund Strategy, Legal & Structuring
Venture debt is a financing tool used alongside equity in high-growth companies, offering a less dilutive way to extend runway and support growth. Used well, it enables companies to scale while managing dilution and capital efficiency.
This session covers the full venture debt landscape, from its origins and rationale to its role in today’s ecosystem. It breaks down deal terms, including structuring, pricing, warrants, covenants, and security packages, alongside the strategic benefits and drawbacks from a GP’s perspective.
It also explores alternative credit-like products and highlights geographic differences in how venture debt is raised and applied across markets.
Key Learning Points
Understanding venture debt
Venture debt is a complementary financing tool used alongside equity, with defined repayment obligations
It originated from asset-based financing used to fund hardware and IT infrastructure
Today it is used to optimise capital structure by extending runway and reducing reliance on equity capital
Deal structuring
Venture debt can be structured as amortising term loans, bullet facilities or working-capital products such as factoring
Pricing commonly includes interest and fees, and may also include warrants or other lender economics
Warrants give lenders the right to buy equity later, typically pegged to the last valuation
Strategic benefits and drawbacks
Venture debt can provide a less diluted complement to equity, but requires ongoing servicing and repayment
Lenders generally look for revenue generation and profitable unit economics
Raising debt prematurely or without the right conditions introduces structural risk
Exploring alternatives
Alternatives include revenue-based financing, factoring and other working-capital products
These products typically address smaller or more targeted funding requirements
These options differ from traditional venture debt in structure and use case
Geographic considerations
Venture debt is well established in North America and more unevenly developed across Europe
In Europe, availability varies by country and market maturity
Legal, regulatory and security-enforcement differences can affect how available venture debt is in different markets
