Not everyone is fond of venture debt

Hadrian CEO: “Unless you’re in real trouble, I would avoid venture debt at almost all costs”

The magic of live panels is that speakers always make comments you didn’t expect — even if you are the moderator and no matter how much prep you have done. I know this from experience: It happened to me at TechCrunch Disrupt 2023.

The panel in question focused on capital-intensive startups, so I knew that we were going to discuss alternatives to venture capital as sources of funding. What I wasn’t prepared for was for the three panelists to agree on dissing venture debt. I was clearly surprised.

“Many startups rely on venture debt: It’s both a cheaper alternative to raising equity and can serve as a capital tool that helps companies build in ways that equity isn’t great for. For some companies in capital-intensive areas like climate, fintech and defense, access to debt is often the only avenue to growth or scale,” my colleague Rebecca Szkutak noted a few months ago in her survey of investors on the topic.

As a manufacturing tech company geared toward space and defense, Hadrian footed the bill for the kind of capital-intensive companies that are supposed to crave venture debt. And yet on the Builders Stage, CEO Chris Power warned fellow founders against it. “Unless you’re in real trouble, I would avoid venture debt at almost all costs,” the Australian entrepreneur cautioned.

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