Definition

Taking on uncertainty when starting or running a business. Accepting some risk can lead to bigger rewards when managed wisely.

What to consider

  • Understand all repayment terms.
  • Consider the impact on cash flow.
  • Avoid taking on too much debt relative to revenue.

Real world scenarios

  • A growing startup secures a loan from a specialized lender to extend its runway without diluting ownership.
  • An entrepreneur uses venture debt alongside equity financing to fund rapid expansion.
  • A tech firm in Silicon Valley leverages venture debt to bridge funding gaps during scaling.

Related terms

Entrepreneurial Finances