Two markets, two directions
Venture debt is often described as one market that rises and falls with venture capital. The latest year-end data says otherwise. In the United States, venture debt reached a record $68.8 billion in 2025, according to the 2025-2026 Venture Debt Review from Runway Growth Capital and PitchBook. In Europe, the Houlihan Lokey June 2026 market update shows deal value dropping about 30.7% to €20.1 billion, and deal count falling to 656 from 848 in 2024.
Both numbers are for 2025, and both come from sources with a stake in the market. Runway is itself a lender, so its report reflects a lender's view. Treat the figures as a map of where debt was flowing, not as a forecast.
For founders and CFOs, the gap matters because it shows debt is not a generic backstop that appears when equity gets tight. It goes to particular borrowers on particular terms.
What the US record actually contains
The headline hides a lot. The US market stayed at roughly 1,000 transactions a year, so the record dollar total did not come from many more deals. It came from bigger ones. The median deal rose to $5.5 million, and the 75th percentile reached $27.7 million. The report notes that averages are skewed by a few large deals, and it calls Anthropic's roughly $2.5 billion facility the outer edge of the market and not representative.
Some context on scale. US venture investment totaled $321.6 billion across more than 17,000 deals in 2025, and AI took 63.5% of deal value. Setting $68.8 billion against $321.6 billion gives debt at about 21% of venture investment. That ratio is my own arithmetic, since the report does not state a share, and the two figures are not strictly like for like, so read it as a rough scale only.
Other findings worth knowing:
- Follow-on financing, meaning new debt for companies that already borrowed, grew from $4.7 billion across 129 deals in 2024 to $12.3 billion across 156 deals in 2025.
- Early-stage venture debt rebounded to just over $15 billion, but the center of the market remains larger, later-stage borrowers who drive repeat financings.
- SaaS financing exceeded $28 billion for the second year running, and healthtech, cleantech and asset- or IP-heavy companies are growing as borrowers. The report cautions that healthtech and cleantech growth came largely from a small number of large structured deals, not a broad shift.
- Venture debt-backed companies accounted for 37% of the $286.9 billion in exit value and 18% of exit count, both up from the prior year.
Europe's slide, and why it may not be a collapse
The European figures look weak against 2024, but 2024 looks like the outlier. Houlihan Lokey puts venture debt at about 29% of total European VC deal value in 2025, down from a 2024 peak of about 47%. Deal value, it says, remained above pre-2021 levels. Its outlook is for volumes to stabilise around 2020 to 2023 and 2025 levels instead of returning to 2024 highs, and it suggests venture debt penetration may hold up better than total VC activity.
The mix is also informative. The UK led with 41% of deal volume and 34% of deployed capital, followed by Germany, Belgium and France. IT was the largest sector by deal count at 37%, but average deal sizes were highest in financial services (about €80 million), energy (about €54 million) and business products and services (about €41 million). Late-stage financing, including later-stage VC, reached 55% of deals in 2023 to 2025, up from 38% in 2015 to 2017. Notable 2025 deals included United Petfood Producers (€1.4 billion), Flix (€1.1 billion) and FINN (€1.0 billion).
Neither report gives interest rates, spreads or warrant terms, so this data cannot tell you what a loan costs today. For that, see our earlier piece on venture debt versus revenue-based financing.
The underwriting test lenders describe
The consistent message in the Runway report is that sector alone is no longer the main determinant of access. Lenders focus on revenue quality, margin profile, customer retention and contracted cash flows. They also want revenue visibility, asset backing or recurring usage patterns, and a clear account of how value converts to cash.
The structures follow from that. The report lists rates, covenants, warrants, multi-tranche facilities and drawdowns tied to operational milestones. In cleantech and healthtech, debt is often built around contracted revenue, recurring usage or asset-backed cash flows. And the report says debt is increasingly part of planned capital strategies for later-stage borrowers, not only a last-resort liquidity source.
That is a useful frame for a data room. A company with monthly recurring revenue, low churn and signed contracts can show a lender where repayment comes from. A company whose story rests on a future round is asking the lender to underwrite the equity market, which is the thing lenders are trying to avoid.
Risks the report itself flags
The enthusiasm has limits, and the report states them:
- Debt can add complexity to the capital structure when fundamentals are weak.
- Repeat access raises the bar, because lenders expect demonstrated performance.
- Debt-backed companies show a longer median time from founding to exit. The report attributes this to the profile of companies that use debt, not to debt itself.
- Capital concentration is extreme: about half of VC dollars went to 0.05% of deals. Over $1 trillion in unrealized value also remains across private portfolios.
That last point is the backdrop. When equity is concentrated in a tiny set of companies, everyone else looks for other sources, and lenders pick the ones with visible cash flows. The report expects this to persist in 2026, with equity staying concentrated while debt expands in scale and applicability, but selective and unevenly distributed.
What to watch next
- Whether 2026 data confirms the pattern. The Runway report includes Q1 2026 activity in a chart but gives no 2026 figures in its text, so full-year numbers will be the real test.
- Europe's share of VC. If venture debt stays near 29% of European deal value instead of rebounding toward 47%, the 2024 peak will look like a one-off.
- Follow-on activity. Repeat borrowing was the fastest-growing slice in the US. Watch whether lenders keep re-upping the same names or widen the pool.
- Pricing disclosure. Without published rates and warrant coverage, founders must get competing term sheets to learn what the market charges.
For anyone planning a raise, the practical reading is to build the lender case early: clean recurring revenue reporting, retention data and contract documentation. That work helps whether the next capital comes as debt, equity or something in between.