Venture debt is a form of bridge financing specifically tailored for early-stage companies and start-ups. It is designed to help them extend their runway, fund growth initiatives, and bridge the gap between equity rounds.
For example, a software startup that raised $4 million in Series A equity adds $1.5 million in venture debt — a loan structured with interest-only payments and small equity warrants — to extend its runway by 9 months without diluting founders further while it hits its next growth milestone.
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