Venture debt has risen to be a key financing tool, complementing the likes of venture capital (VC), private equity (PE), and other similar asset classes by extending non-dilutive capital, allowing startups to leverage funds for diversified growth, according to a report released today by Stride Ventures in collaboration with management consultant firm Kearney, titled the ‘The Global Venture Debt Report 2025’.
Venture debt deals with credit-based financing products that apply specifically to PE-VC backed early-stage startups, growth stage, or even late-stage in their trajectory.
According to the report, global venture debt deal values surged from USD 37.9 billion in 2018 to USD 83.4 billion in 2024, reflecting a 14 per cent CAGR. Venture debt now accounts for 20-30 per cent of total funding in mature markets like the US and Europe.
Ishpreet Singh Gandhi, Founder and Managing Partner, Stride Ventures, said that when the firm started its journey in 2018, venture debt was an asset class valued close to USD 100 million and now has reached a valuation of USD 1.3 billion, a staggering 13x growth over the past six years.
“I think naturally we have come a long way. I see a gradual shift of venture debt being rooted.I see a gradual shift of large Indian startups going global. And that’s the evolution of the asset class,” said Gandhi.
The report defined venture debt for its adaptability, ability to fit into existing deal structures to align with regional market maturity, and the local regulatory frameworks. In a growing market like India, where the startup ecosystem is witnessing rapid expansion, venture debt in its current stage is primarily catering to early and growth stage outfits, and with an increasing share of pre-IPO deals, it is offering capital backed by assets.
Prashanth Prakash, Partner at Accel, who was present at the report launch, said that startups earlier were only riding on the crutches of venture capital, which is the most expensive form of funding, and gone are the days where startups look to extend the runway by raising more and more capital.
“I’m really happy with how the product (venture debt) has evolved. There’s still more ground for new kinds of products. And I think players like Ishpreet (Stride Ventures) coming into the mix actually moved the asset from this capital class positively. Because only when there is competition, only then you have innovation. It’s great to see that venture debt has filled that void as a bridge between venture capital and banks,” said Prakash.
Prakash also emphasized the need for creating financing products for companies to supply to the infinite global demand. “Irrespective of tariffs in a multi-polar world. India will have its place to supply something to somebody, right? We just have to manufacture. And we have to be that country other than China, where a significant portion of that value goes to.”
The report further stated that venture debt has a high degree of concentration in total deal value, with as much as 80 per cent in top three sectors. Venture debt portrays a distinct sector focus, with 37 per cent deal values concentrated in fintech, 25 per cent in consumer sectors, and 18 per cent in cleantech. Consumer sector led in deal counts with 81, but fintech attracted more investment, amounting to USD 447 million.
Top venture debt deals in India were bagged by companies such as Fibe, Upstox, Curefoods, OLA Electric, and BatterySmart, including others.
Rahul Taneja, Partner at Lightspeed said that the ecosystem overall has evolved on both sides, the side of capital providers and the people leveraging capital- the companies and that in early stage of these businesses, it is a dangerous time to take on leverage.
“We see that happening across maybe four or five very, very different kind of sectors. The most primary of these would be commerce, which is manufacturing tech, which is India to the world. I think that is where there is a substantial amount of leverage that people are seeking, both in India as well as globally,” said Taneja.
From the Southeast Asia perspective, the venture debt market expanded at a 75 per cent CAGR to USD 2.12 billion. The GCC region, while still emergent, showcased strong momentum with a 54 per cent CAGR, counting to USD 0.5 billion in 2024, according to the report.
Ashish Kumar, Co-Founder & General Partner at Fundamentum, said that the use cases for venture debt have slowly been opening up, with it being a great asset class for investors and a great medium of capital for asset-heavy businesses.
“Could you not create a new age digital equivalent of that and then effectively use some sort of debt, and it could very early maybe venture debt or the different sorts of credit instrument that would be available. But we did not do that for a long period of time and it is only now that we are starting to do that. So when I look at it from an India lens, we have not shied away from investing in businesses that have taken and hold inventory directly or indirectly,” said Kumar.
“And we have the use cases for venture debt. So that is the lens that I would probably say, which has a slightly different tradition but more and more mainstream at this point,” added Kumar.