Startups
Tech Startups Find One of Their Last Funding Sources Is Drying Up
- Venture debt volume in first quarter fell to lowest since 2017
- Disappearing credit could push more companies to collapse
A First Citizens Bank branch in Alpharetta, Georgia.
Photographer: Elijah Nouvelage/BloombergThis article is for subscribers only.
A key form of financing that startups rely on is shrinking, hurting new companies that are already starved for capital.
The volume of venture debt, a type of loan that younger companies line up to help pay the bills, plunged to $3.5 billion in the US in the first quarter, according to PitchBook, the lowest level since 2017. Climbing interest rates have made the funding more expensive for companies, and one of the biggest venture lenders, Silicon Valley Bank, faced a run on the bank that forced government regulators to seize it and sell it.