What is debt?
Debt is a financial obligation a company owes to lenders — banks, bondholders, venture-debt funds, suppliers extending credit — that must be repaid according to a schedule, with interest. Unlike equity, debt does not transfer ownership but carries enforceable claims against company assets.
Common startup debt instruments include venture debt (Silicon Valley Bank-style growth loans), revenue-based financing, working-capital lines and term loans. Debt covenants — financial ratios, reporting, change-of-control restrictions — must be carefully reviewed before signing.