Runway Growth Capital and PitchBook issued their 2025-2026 Venture Debt Review, which revealed that debt financing is now a fundamental component of startup capital planning.
As venture debt in the U.S. reached a record $68.8 billion in 2025, it reflected a shift in how startups finance growth amid a more selective venture capital environment.
The annual report examines the evolving venture debt market and how startups, lenders, and investors are integrating debt financing into broader capital strategies. The central finding is that venture debt is no longer a niche or last-resort option; it has become an established part of the venture ecosystem.
Although U.S. venture debt reached a record high, annual deal volume remained stable at about 1,000 transactions. This indicates that market growth is driven by larger and more sophisticated financings, not just an increase in borrowers.
Overall, U.S. venture investments totaled $321.6 billion across over 17,000 deals in 2025, with 63.5% of deal value concentrated in artificial intelligence.
“Venture debt has moved from the margins of the venture ecosystem toward its core,” said David Spreng, Founder and CEO of Runway Growth Capital. “The fact that venture debt reached a record level while deal count remained stable shows this market is getting bigger and more sophisticated.”
An Alternative to Giving up Equity
Startups seeking to rely less on equity financing are increasingly turning to debt financing. By doing so, itt extends their runways, preserves ownership, and supports growth. As equity investors become more selective, companies with strong fundamentals are using debt to maintain flexibility.
This shift has heightened the importance of fundamentals like revenue quality, customer retention, operating performance, margin profile, capital efficiency, and a clear path to profitability.
For companies demonstrating these qualities, venture debt can be a valuable complement to equity financing.
Larger and Repeat Financings Drive the Market
The report also found that larger debt financings are driving market growth. Deal sizes increased, with the 75th percentile at $27.7 million and the median at $5.5 million.
Follow-on financing also grew significantly, with follow-on venture debt volume rising from $4.7 billion across 129 deals in 2024 to $12.3 billion across 156 deals in 2025.
This growth suggests companies are increasingly using venture debt in ongoing capital planning, rather than as a one-time bridge or emergency option.
Beyond SaaS: Healthtech, Cleantech and Asset-Heavy Companies
Software-as-a-Service and AI companies remain central to venture debt activity. SaaS financing exceeded $28 billion for the second consecutive year, according to the report.
Healthtech, cleantech, and asset- or IP-heavy companies are expanding in the market. In these sectors, lenders are structuring debt around contracted revenue, recurring usage, asset-backed cash flows, and other stable sources of enterprise value.
“The common thread is not sector,” Spreng said. “It is underwritability. Companies that can demonstrate revenue quality, capital efficiency and clear paths to cash flow are finding that venture debt can be a powerful tool and amplify strong fundamentals.”
Exist Rebound of Debt-Backed Companies
The report also notes a rebound in exit activity. U.S. exit value reached $286.9 billion in 2025, with venture debt-backed companies representing 37% of total exit value and 18% of exit count.
Both figures increased from the previous year, indicating that companies using debt financing are participating more actively in the broader venture-backed exit market.
What the Venture Debt Record Means for Startups
The report concludes that venture debt will likely remain important through 2026 as startups seek capital-efficient growth. As funding diverges between AI companies and the broader startup ecosystem, venture debt is emerging as both a source of discipline and a strategic advantage.
The Runway Growth Capital and PitchBook report suggests that debt financing is not just a response to a challenging equity market, but a mature tool for companies focused on financial discipline.
