Venture debt deals largely loan-driven
With venture debt funds shying away from subscribing to equity warrants at high valuations, most start-ups are closing out pure-debt deals at high coupon rates. “Start-ups are taking on debt at higher than the usual 14-15.5%. Interest rates on these can go as high as 18-20%,”said an investor.
The number of deals, with an equity upside, has fallen sharply. Compared with 38 deals in 2022 and 49, the year before, Tracxn data shows that startups have closed out only 17 venture debt deals this year so far.
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