When the Going Gets Tough, Startups Borrow Money
Bloomberg Businessweek US|September 19, 2022
Venture debt is on the rise as VCs pare investments
When the Going Gets Tough, Startups Borrow Money

Venture capitalists have spent years aggressively buying stakes in technology startups, valuing more than 1,000 of them at $1 billion or more apiece, even though many remained far from profitable. The turn in the market this year has led venture investors to slow their pace of writing checks—and startups to take on increasing amounts of debt.

Debt remains a small slice of total venture funding, but its share of the market is increasing. With interest rates low, venture debt increased significantly over the past several years, according to data from PitchBook Data Inc. Volume in the US hit $17.1 billion in the first six months of 2022, up 7.5% from the same period in 2021. VC funding is down 8% over the same period, to $147.7 billion.

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