Venture debt is being repriced. Founders should read the small print.
Spreads on growth-stage facilities have widened by 150 to 250 basis points since the start of the year. The headline rate is not where the cost is hidden.
Adrian Halloway
Partner, Structured Credit
Credit markets in brief
Part of our Credit markets series, this 6 min note is written by Adrian Halloway, Partner, Structured Credit, and sets out what the desk is seeing, followed by the three points we would watch before signing.
- Series
- Credit markets
- Published
- 28 October 2026
- Author
- Adrian Halloway · Partner, Structured Credit
- Reading time
- 6 min
Three years of cheap liquidity taught a generation of founders to treat debt as a commodity. That assumption is now being tested. Facilities that priced at base plus six in 2023 are being refinanced at base plus eight and a half, and the lenders quoting the tightest headline coupon are usually the ones recovering it somewhere else.
The recovery happens in three places. Warrant cover, which dilutes quietly at the next round. Prepayment penalties that turn a two-year bridge into a five-year liability. And maintenance covenants tested on a metric the company does not report monthly, which gives the lender an option rather than a protection.
None of these terms is unfair on its own. What matters is whether they are read together. A facility with generous warrant cover and a loose covenant is a different instrument from one with tight cover and a revenue floor tested quarterly, even if both quote the same rate.
Our own approach has been to keep the headline rate honest and the structure plain: draw in tranches, price on drawn capital, hold warrant cover to a single negotiation at the start. Founders who compare facilities on coupon alone will, on average, pay more than they expect.