U.S. venture capital firms invested over $180 billion into high-potential startups in 2024, marking a 27% increase from the previous year. A significant portion of this investment was directed toward sectors such as artificial intelligence (AI), clean energy, and life sciences.
Venture capital remains a powerful force in startup financing—and companies that take a strategic approach to financing are in a strong position to thrive.
At ATEL Ventures, we’ve seen firsthand how savvy founders are using a mix of capital sources—venture equity, non-dilutive funding, and venture debt—to build and scale their businesses efficiently. Venture debt, in particular, is playing an increasingly valuable role in helping startups extend runway, accelerate growth, and maintain control over their future.
A Smarter Approach to Startup Financing
Venture debt is never a substitute for equity financing, but it does serve as a complement, offering companies an additional layer of flexibility and allowing them to fund growth initiatives, strengthen their financial position, and delay or optimize the timing of their next equity round.
By leveraging venture debt, startups can:
- Extend their runway between equity rounds while maintaining more ownership
- Invest in growth initiatives such as customer acquisition, hiring, and product expansion
- Reduce dilution in an environment where valuation fluctuations may make equity funding more costly—long term, taking on venture debt is less expensive than surrendering equity, even more so when valuations are low
- Build financial resilience, ensuring they have the flexibility to respond to opportunities and challenges
Maximizing Control and Optionality
In 2025 we see startups taking a much more deliberate approach to when and how they raise equity capital. Rather than raising funds at a suboptimal valuation, many are using venture debt to bridge funding gaps and reach milestones that increase their attractiveness to investors.
This approach allows founders to retain more ownership and maintain stronger negotiating power when the time comes to raise their next round.
Supporting Growth Across Key Sectors
We see companies across space technology, life sciences, AI, renewable energy, and advanced manufacturing successfully integrating venture debt into their financing strategies:
- High-growth hardware companies are using venture debt to fund capital-intensive infrastructure
- SaaS and AI startups are leveraging it for customer acquisition without excessive dilution
- Climate tech and deep tech companies are using it to fund commercialization and scale production
A Positive Outlook for Venture Debt
Venture debt has long been a go-to strategy for well-funded startups looking to optimize their capital structure, and that remains true today. With non-bank lenders offering increasingly tailored solutions, the flexibility available to startups has never been greater.
At ATEL Ventures, we don’t see venture debt as a last resort—we see it as a sign of smart financial leadership. The startups that strategically combine equity and debt financing will be best positioned to scale efficiently, preserve ownership, and maximize long-term value.