Venture Debt

“Raising capital can be challenging, and each funding round often results in significant dilution. We help startups explore a viable alternative—venture debt—enabling you to grow your vision while retaining as much equity as possible.” – Tomas Milar, Founder & CEO

Building a successful startup requires not just a bold vision but also strategic financial solutions that fuel your growth and extend your runway. Venture debt complements equity funding by providing additional capital to achieve key milestones, accelerate growth, and possibly improve your valuation before the next funding round without diluting ownership. It ensures that you’re well-positioned for long-term success and provides maximum flexibility.

Eqvista has partnered with Cheqly to help startups secure funding. Our mission is to enable startups to pursue their vision while keeping more of their equity. Boost your growth, and protect your ownership!

What is Venture Debt?

Venture debt is a flexible financing option designed to help venture-backed startups bridge the gap between funding rounds. Unlike bridge funding rounds, venture debt does not dilute equity. If the capital from the last round proves insufficient, venture debt is a great way to extend your runway to reach key milestones. Typically, venture debt is capped at 20% to 40% of what you raised in the previous round.

Lenders usually take warrants as part of the deal, giving them the right to buy equity later, aligning their interests with your company’s success.

Why consider venture debt?

Venture debt is one of the most powerful tools for startup financing. It helps founders secure funding while strategically preserving equity. Additionally, the tax benefits and flexible repayment terms make venture debt a cost-effective funding option. Some of the key advantages of venture debt are:

• Preserve equity – Venture debt allows startups to raise funds without issuing equity. Some lenders may ask you to issue warrants; however, this typically leads to far less dilution than equity funding.
• Accelerate growth – Between funding rounds, you can rely on venture debt to boost your startup’s growth story.
• Flexible repayment terms – Venture debt usually has an interest-only period that helps conserve cash.

Process of Venture Debt

Whether you just closed a funding round or are heading into one, we can extend your runway and fuel growth through venture debt—preserving your equity while giving you the flexibility to scale, acquire, or boost revenue.

• Application and assessment – Once you submit your venture debt application, the lender will evaluate factors like your VC backing, financial health, and overall business viability to assess risk.
• Funding phase – Upon approval, you will receive the loan amount as either a lump sum or as a line of credit. The interest rate will be set as per the perceived risk.
• Repayment and refinancing – For 6-12 months, you have to pay only the interest after which you must start paying back the principal as well. In case of repayment challenges, refinancing may be an option.

Why are we good for startups?

Eqvista has partnered with Cheqly to provide founders fast and efficient access to venture debt. We aim to offer maximum support with minimal processing time. To achieve this, we’ve established strong partnerships that ensure seamless and reliable financing for your growth journey. We provide startups access to services such as valuations, cap table software, business accounts, and venture debt.

Frequently Asked Questions

Some of the common queries regarding venture debt are as follows:

What are the key factors lenders consider when evaluating a startup for venture debt?

Like in traditional funding, when providing venture debt, lenders look at factors such as product-market fit, founding team, exit potential, and business model. Additionally, lenders will also check the startup’s financial health and if venture capitalists back it.

Are there any collateral requirements for venture debt?

Venture debt, unlike other financing tools, is specifically designed not to require collateral, but it is a common practice to issue small warrants to lenders.

What are the common repayment terms for venture debt?

Typically, venture debt has a repayment period of 2-4 years, with an initial interest-only phase lasting 6–12 months before principal repayments begin.

Disclaimer: Cheqly is a financial technology company, not a bank. Deposits held at Evolve Bank & Trust are insured up to $250,000 per depositor, per account ownership category, by the FDIC. FDIC insurance protects against the failure of an FDIC-insured depository institution. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply.