A newly released industry study from Runway Growth Capital has highlighted a significant shift in private financing, showing that venture debt has climbed to unprecedented levels even as deal activity holds steady.
Produced in collaboration with PitchBook, the 2025–2026 Venture Debt Review takes a close look at how companies are increasingly turning to debt financing as an alternative to equity fundraising in a market still dominated by concentrated investment trends, particularly in artificial intelligence.
The report paints a picture of a maturing funding environment where capital efficiency, ownership preservation, and structured borrowing are becoming central to growth strategies.
Venture Debt Climbs to $68.8 Billion Despite Stable Deal Volume
One of the standout findings shows U.S. venture debt reaching a record $68.8 billion in 2025.
While total capital deployed surged, the number of transactions remained largely unchanged at around 1,000 deals.
This divergence suggests a shift toward larger, more structured financing rounds rather than a broad expansion in deal-making activity.
Companies are not necessarily borrowing more frequently, but they are borrowing more when they do, signaling increased confidence from lenders in borrower quality and financial visibility.
Larger Deal Sizes and Rising Follow-On Activity Signal Market Deepening
The report highlights a clear upward movement in deal sizing across the market.
The 75th percentile deal size rose to $27.7 million, while the median climbed to $5.5 million, reflecting stronger capital needs and more sophisticated borrowing structures.
Follow-on financing activity also expanded significantly, increasing from $4.7 billion across 129 deals in 2024 to $12.3 billion across 156 deals in 2025.
This growth underscores a pattern where companies are returning to debt markets multiple times as part of their funding lifecycle rather than relying on one-time financing events.
These trends point to a more embedded role for venture debt in long-term capital planning rather than short-term liquidity support.
Debt Becomes a Strategic Tool for Growth-Focused Companies
According to the report, venture debt is increasingly being adopted by later-stage companies with stable revenue profiles, strong customer retention, and predictable cash flows.
Instead of serving as a last-resort financing option, it is now being integrated into deliberate capital strategies.
Borrowers with stronger fundamentals are finding easier access to structured debt as lenders prioritize revenue visibility and durable business models.
In sectors such as healthtech and cleantech, financing structures are also evolving to reflect asset-backed or contracted revenue streams, further expanding eligibility beyond traditional software businesses.
David Spreng noted that this shift reflects a broader move toward financing discipline, where companies balance growth ambitions with ownership preservation.
AI Dominance Persists While New Sectors Gain Ground
Even as the market broadens, artificial intelligence and SaaS continue to anchor the majority of activity.
SaaS alone accounted for more than $28 billion in financing for the second consecutive year, reinforcing its position as a core pillar of venture-backed lending.
However, the report also points to rising activity in healthtech, cleantech, and intellectual property-heavy businesses.
These sectors are increasingly structured to support debt financing due to recurring revenue models, contracted cash flows, or asset-backed value creation.
This expansion signals that venture debt is no longer confined to traditional software models but is adapting to a wider range of industries with predictable financial structures.
Exit Activity Strengthens as Venture Debt Backed Firms Gain Share
Exit markets also showed notable strength in 2025, reaching $286.9 billion in total value.
Companies supported by venture debt accounted for 37% of overall exit value and 18% of total exit transactions, both representing an increase compared to the previous year.
The findings suggest that debt-backed companies are playing a growing role in liquidity events, particularly as investors seek more efficient capital structures ahead of exits.
Looking toward 2026, the report expects venture debt to expand further as equity markets remain concentrated and selective.
In this environment, structured debt financing is positioned as both a stabilizing force and a competitive advantage for companies seeking flexible growth capital.
The full report is available here: Venture Debt Review Report
