Debt counsel for venture-backed and growth-stage companies, covering term loans, growth facilities, and the warrants, covenants, and intercreditor terms that have to sit cleanly beneath the equity and survive the next round.
Venture debt is borrowed runway. A lender advances a term loan to a company that is losing money on purpose and takes interest plus a warrant for the risk. The loan usually begins with an interest-only period of six to 24 months, then amortizes over two or three years, and a final payment fee of a few percent falls due at maturity or on prepayment. The cheapest-looking term sheet is rarely the cheapest facility.
The lender takes a lien on all assets, often with a negative pledge rather than a lien on the intellectual property, and a control agreement over each bank account. Everything else in the loan agreement is written for a borrower with no profit to lend against, which is why the covenants and the default triggers deserve the slowest reading of all.
We act for venture borrowers and for the banks and funds that lend to them, never on both sides of one deal, and we draft each facility for the round that has to repay it.
Senior term loans and growth-capital facilities for venture-backed and growth-stage companies, including commitment papers, loan agreements, and the draw, amortization, and interest-only terms that decide how much runway the money buys.
Negotiating warrant coverage, strike price, term, and anti-dilution and exit provisions, the equity upside a venture lender takes for the risk, so the real cost of the facility is understood and priced before signing.
Financial and operating covenants, reporting, and material-adverse-change and event-of-default triggers calibrated to a company growing on purpose, drafted so a missed plan does not become a default and the lender's protections stay real.
Security packages, negative pledges, and the intercreditor and subordination terms that position venture debt beneath the equity and alongside any other creditor, drafted with the next financing and the cap table in view.
Revenue-based financing, convertible notes, SAFEs used as bridges, and other non-traditional growth structures, with the instrument matched to the company's stage, runway, and the way the capital is expected to be repaid.
Representation from either chair through the whole facility, from term-sheet negotiation, conditions, and drawdown to the amendment, prepayment, or workout conversations that follow, coordinated with the company's venture-financing and cap-table counsel.
Coverage of ten percent means warrants to buy shares worth ten percent of the loan amount, usually at the last round's price and in that round's preferred stock. Add the final payment fee and the interest, and the all-in cost is what a board compares to dilution, not the headline rate.
A venture lender usually lends soon after a priced round and sizes the facility at a fraction of it, commonly a quarter to a third, because the real collateral is the investors' appetite to fund the next one. Expect questions about who led, what is reserved for follow-on and when the board plans to raise.
A material adverse change clause lets the lender call a default on judgment rather than on a number. An investor-abandonment clause, in some forms, does the same if the existing investors signal they will not fund again. A performance covenant tests revenue against the plan the board approved. Each should be narrowed before signing.
The biggest risk is a facility that complicates your next raise: covenants that block a new financing, change-of-control terms that snag an exit, and intercreditor provisions a future investor rejects. The debt should sit cleanly beneath the equity.
Venture debt is repaid out of the next round, cash flow, or an exit. If none of those is in credible view, more debt narrows the runway instead of extending it. How the loan gets repaid should be answered before the term sheet is signed.
Repaying the loan does not retire the warrant. It typically runs seven to ten years, carries a net-exercise right so the lender need not pay cash, and on a sale is settled for the deal consideration or, under some forms, a cash put. Diligence for the next round counts it in the fully diluted capitalization.
Before anything is signed, the term sheet is re-read as economics: interest plus warrant coverage, strike, term, and prepayment together, modeled against the dilution of raising more equity instead. Exclusivity and deposit terms are trimmed so shopping the deal stays possible.
Loan agreement and warrant are negotiated in parallel. Financial covenants, MAC clauses, and investor-abandonment triggers are rewritten for a company burning cash on plan, so a missed forecast is a conversation with the lender rather than an event of default.
The security package is settled next. An all-asset lien is taken under UCC Article 9, the IP is treated by negative pledge or lien, deposit-account control agreements are put in place with the company's banks, and the subordination terms are written so a Series B investor will not strike them in diligence.
After drawdown the facility is managed toward the raise that repays it, through lender consents for the new preferred, warrant adjustments on the new price, and amendment or interest-only extensions when the round slips. At exit, the warrants are settled on the terms fixed on day one.
A venture loan is repaid by a round that has not happened yet. Draft it that way.
Venture debt is a term loan or growth facility extended to a venture-backed or growth-stage company, usually alongside an equity round. It supplies additional runway with less dilution than selling more equity, and the lender is typically compensated for the risk with interest plus warrants, a small slice of equity upside. The structure is built around the company's path to its next raise or exit, because that is what repays the loan.
A bank underwrites cash flow and collateral; a venture lender underwrites the investors and the next round. The documents show it. A venture loan opens with an interest-only period, then amortizes over two or three years, and carries a final payment fee and a warrant that a commercial loan would not. Its covenants are lighter on ratios and heavier on judgment, with minimum-cash tests, a material adverse change clause and sometimes an investor-abandonment trigger in place of a debt-to-earnings test. The security is an all-asset lien, with the intellectual property often left under a negative pledge rather than a lien.
A warrant is the right to buy a fixed amount of the company's stock at a set price for a number of years. Venture lenders take warrants because the interest rate alone does not pay for the risk of lending to an unprofitable company; the warrant gives them equity upside if the company succeeds. The number that matters is warrant coverage, meaning the warrant's value as a percentage of the loan, and we negotiate coverage, strike price, and the anti-dilution and exit terms so the cost is understood up front.
It should not, if the documents are drafted with the round in view. The risks are in the details, in covenants that constrain a new financing, change-of-control or prepayment terms that complicate an exit, and intercreditor or subordination provisions that future investors object to. We negotiate those terms so the facility sits cleanly beneath the equity and does not become a problem in the next diligence, and we coordinate with the company's venture-financing counsel on the cap-table mechanics.
Both, though never on opposite sides of the same deal. For a company the work is the term sheet, the warrant and the covenants, read against the round that has to repay the loan and the diligence that round will run on the documents. For a bank or a venture fund it is the security package, the control agreements and the triggers that protect the loan when the plan slips. A lender's standard form, seen from both sides many times, is where most of the negotiation can be shortened.
Venture debt tends to fit a company that has recently raised equity, has a credible line of sight to its next round or to profitability, and wants to extend runway, fund a specific growth initiative, or reduce dilution between rounds. It is not a substitute for equity for a company without a path to repay, and the question of how the loan gets repaid, through the next raise, cash flow, or an exit, should be answered before the term sheet is signed.
Senior, unitranche, mezzanine, and second-lien debt for acquisitions, buyouts, and recapitalizations, with the credit and covenant terms that have to survive diligence and a downturn alike.
Explore →Bilateral and club facilities from credit funds and direct lenders, covering the documentation, security, and economics of lending outside the syndicated bank market.
Explore →Revolving and asset-based facilities secured against receivables, inventory, and working-capital assets, with the borrowing-base mechanics, security, and intercreditor terms.
Explore →Reviewed by Jonathan D. Herpy, Sr., Senior Partner · Last updated October 2026 · Educational overview · Not legal advice
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