What is Venture Debt?

Venture debt is a form of non-dilutive debt financing specifically designed for venture-capital-backed UK startups and high-growth companies. It provides growth capital alongside existing equity funding — allowing VC-backed businesses to extend their cash runway or fund specific growth initiatives without issuing additional equity and diluting existing shareholders. Seven Hills Capital Group has relationships with the active venture debt providers in the UK market and will identify the right facility for your funding stage.

The business has existing VC backing — venture debt lenders typically require at least one institutional equity investor

The lender provides a debt facility — typically 20–35% of the most recent equity raise

The facility is drawn as needed over a draw period — typically 12 months

Repayments are made over 24–48 months from the date of first draw

Warrants — options to purchase equity at a fixed price — are typically issued to the lender as additional compensation

Pros

• Non-dilutive — extends runway without further equity dilution for existing shareholders
• Complements equity funding — adds capital efficiency to the overall funding stack
• Can bridge to the next equity round at a higher valuation — reducing dilution
• Faster to arrange than a full equity fundraise in most cases

Things To Consider

• Requires existing institutional VC backing — not available to bootstrapped or angel-backed businesses
• Warrants mean the venture debt lender participates in equity upside to some degree
• Higher cost than traditional business lending due to the risk profile of growth-stage companies
• Financial covenant structures can restrict operational flexibility during the facility term

How Seven Hills Capital Group Could Help Your Business

Every business situation is different. The illustrative examples on our case studies page are based on common scenarios we see from UK business owners and landlords - showing how the right finance product, found through a whole-of-market broker, can make a real difference.

Do I need to have raised venture capital to access venture debt?

Yes. Most venture debt lenders require at least one institutional equity investor — typically a recognised VC fund. This provides confidence in the business model and a clear path for exit or refinancing. Seven Hills Capital Group will confirm which venture debt providers are appropriate for your specific VC backing.

How much can I raise through venture debt?

Venture debt facilities typically represent 20–35% of the most recent equity raise. For a VC-backed business that has raised £5 million in a Series A, venture debt of £1 million to £1.75 million might be available. Seven Hills Capital Group will identify the realistic range based on your funding round and investor profile.

What are warrants in the context of venture debt?

Warrants are options issued to the venture debt lender to purchase equity in your business at a fixed price — typically a small percentage of the total facility value. They give the lender participation in equity upside on exit in addition to interest payments.

How is venture debt different from a convertible note?

A convertible note is a debt instrument that converts into equity at a future funding event. Venture debt remains as debt throughout — it is repaid in cash at maturity. Warrants give a small equity element but the main venture debt facility does not convert to equity.

When in my funding journey should I consider venture debt?

Venture debt is most commonly used after a Series A or B equity raise, when the business has proven its model and needs additional capital to hit the next milestone. It extends runway, funds specific growth initiatives, or bridges to the next round — Seven Hills Capital Group will advise whether the timing is right for your situation.