Last month, when the startup bench suddenly failed, the company lender called a startup loan, the shutdown was forced. In the latter half of 2023, the fleet of the digital cargo company faced financial issues and led a venture loan Hercules Capital to assume company management to collect investment.
Divvy Homes, which was sold last week for about $ 1 billion to Brookfield Prepaties, reported last week that he left the company shareholder without payment. The specific role of Divvy's lender in sales is unknown, but in 2021 we borrowed $ 735 million from Barclays, Goldman Sachs, Cross River Bank, etc.
Many of the weakest startups have already failed after a large number of weak startups in 2020 and 2021 are funded with loose diligence, famous. However, the data suggests that it has not yet bottomed out, and more people die in 2025. According to Silicon Valley Bank, venture debt plays a role after investing $ 41 billion in the record of 2,339 records in 2021.
David Spren, the founder and CEO of Venture Debt provider Runway Growth Capital, states:
With concern about the future of investment, SPRENG believes that lenders are increasingly pushing up to sell startups to minimize potential losses.
John Markell, a managing partner of the venture debt advisory company Armentum Partners, has almost all lenders who are currently having problems in the portfolio.
Debt helps a rapid growing startup to meet the needs of cash without selling company chunks to VCS, but also increases the risk of negative results. Too much debt compared to startup income and cash preparation can lead to forced fire and sales sold in just a small part of the previous value. Alternatively, lender can rely on seizure, so you can claim the basics used to protect loans to collect at least a part of investment.
If the startup can be persuaded to inject more cash into new or existing VCS by purchasing more shares, if you are delayed to other aspects of payment or contract, the lender will act. You can avoid that. For example, some venture debt contracts have the requirements for fluidity and driving capital ratio. If the startup cash is too low, the lender may take action.
However, investors are reluctant to continue to provide funds to growing new companies to justify the evaluation of the sky in 2020 and 2021.
“There are companies with a lot of problems now,” McCell said. “Many unicorns do not do business immediately.”
SPRENG also predicts that many startups have no choice but to sell at low prices this year or close. But for now, most of the lenders want to be able to find a house by selling these startups and even on fire sales.
Markel said that the lender is forcing the acquisition to earn a lot of money that is generally paid and does not even make money. Investing in startups is a risk that knows that venture capitalists will occur.
If sales occur, Spreng says that many of these transactions remain private due to disadvantageous results for venture investors. Nobody wants to win the victory lap when they lose money.
However, debt holders have a priority for repayment, so venture lenders are less likely to lose their capital.
However, the risks related to venture debt have not delayed the appeal. According to PitchBook Data, the new venture debt was issued in 2024 for the first time in 10 years, $ 53.3 billion. The considerable part of the capital is a notable example, including Coreweave, which has been $ 7.5 billion in debt loans, and an Openai, which has won $ 4 billion of credit lines. There was.