TLDR: Demand for debt remains strong, interest in non-bank specialty lenders is on the rise, and lender reputation has become increasingly important following the collapse of Silicon Valley Bank.
Runway Growth Capital LLC (“Runway”), a leading provider of growth loans to both venture and non-venture-backed companies seeking an alternative to raising equity, today announced the findings from its third Venture Debt Review . Produced in partnership with Sage Outcomes, the survey gauges the current market perceptions of venture debt financing, and explores how the collapse of Silicon Valley Bank (“SVB”) in March 2023 has shaped the views of both capital seekers and capital providers.
Key findings from the survey include the following:
- 88% of Venture Capital (“VC”) respondents reported their portfolio companies plan to pursue venture debt in the next 12-18 months
- A third (33%) of entrepreneurs stated that in their opinion, venture banks have become less trustworthy since the collapse of SVB
- 23% of VCs felt that venture banks have become less trustworthy following the collapse of SVB
- 67% of entrepreneurs stated that they were willing to raise venture debt with a non-bank or specialty finance lender.
Though misperceptions about venture debt persist (as they have historically), the collapse of Silicon Valley Bank seemingly did not affect demand for venture debt or its outlook in the months ahead. Yet, lender reputation has become increasingly important and participants indicated a heightened interest in non-bank specialty lenders.
“Despite facing unprecedented disruptions like the collapse of Silicon Valley Bank – a shockwave that many thought might dampen enthusiasm for our industry – the demand for venture debt remains strong,” said David Spreng, Founder, Chairman, and Chief Executive Officer of Runway.
Venture debt was at the forefront of conversation during the nation’s banking issues last year, which brought to light several misconceptions surrounding the difference between early-stage and late-stage lending.
Runway Growth Capital provides senior term loans of $10 million to $100 million to fast-growing companies based in the United States and Canada.
