In March, the media was inundated with analysis of the Silicon Valley Bank (SVB) collapse. One perspective that seems to be more soft-spoken than others is that of venture debt funds (VDFs), which are distinct from commercial banks (CBs), lending to technology companies.

This difference between these two financing sources is important. With the recent news, the word “venture debt” seems to be conflated across CBs and VDFs, but the two can be quite distinct for borrowers or a venture equity investors or board members. For example, an asset-back revolver (such as an inventory line) from a bank might be called venture debt, but so might a senior secured term loan from a private debt fund, even though the latter is twice as expensive and far more flexible. READ MORE