The rise of venture debt: a response to the new normal in the entrepreneurial ecosystem

The rise of venture debt as a financing alternative that allows founders to access liquidity without diluting their capital in the company is redefining the rules of the game. In an environment marked by investor caution and greater demands for efficient capital management, this modality is consolidating itself as a strategic lever for companies with traction and a long-term vision.

In the last two years, venture debt has become a key tool in the financial structure of high-growth companies. Its emergence responds to a structural change in the venture capital market: after record investments in 2021, venture capital has shifted toward a position where investment funds prioritize criteria such as sustainable growth or the company’s runway.

In this context, this financing formula has found the ideal breeding ground for growth, but it is not the ideal solution for all types of companies. “Venture debt is not for small or early-stage startups. If you’re not growing 30% or 40% annually, you probably don’t have a good product-market fit,“ said Christhi Theiss, head of debt investments at BBVA Spark, during her speech at the panel ”Venture Debt: A Smart Alternative For Startups”, held as part of South Summit 2025.

Christhi Theiss’ statement sums up the market consensus well: debt is not intended to replace equity, but rather to complement it when there are solid metrics and scalability. “Venture debt is there to support smart growth, with a solid operational foundation,” Theiss remarked during this event.

In Spain, startups such as Exoticca have turned to this formula to boost their operations or their investment in technology. But this is just a small sample of a growing trend: Spanish startups raised €2.3 billion in debt during 2024, a figure that exceeds the total volume of venture capital investment recorded in the same year (€1.9 billion), according to ‘The Spanish Tech Ecosystem Report 2025’, produced by Dealroom in collaboration with BBVA Spark. 

This evolution reflects a notable change in the financing model for high-growth companies in Spain. Although the ecosystem has doubled in value since 2020 to reach €110 billion, its conversion rate to advanced stages such as Series A is still below the European average. In this context, debt is positioned as an essential bridge for scaling projects without relying exclusively on equity.

At the same time, the role of corporate funds (Corporate VC) and entities such as BBVA Spark, which already participate in one in five rounds, as well as the influx of foreign capital, have reinforced the evolution of this solution by allowing many scaleups to finance their growth and international expansion operations without incurring significant dilution.

From an European perspective, this trend is also generating greater interest among entrepreneurs. According to the ‘State of European Tech Report 2024’ produced by Atomico, the European ecosystem closed 2024 with some €45 billion in venture capital investment. However, there is still a significant gap in growth stage financing: over the last decade, European scaleups have been underfunded by more than $375 billion compared to their US counterparts.

To reduce this gap, venture debt is emerging as a key financial lever. While markets such as the United Kingdom, France, and Germany already have specialized vehicles and a greater financial culture around this financing solution, Spain is beginning to stand out for its accelerated adoption and growing interest from institutional investors.

In Latin America, venture debt is gaining prominence in response to an ecosystem that is facing stabilization but continues to be marked by high interest rates and lower liquidity. According to the report prepared by Endeavor and Glisco Partners, “Venture Capital and Growth Equity in LATAM: Overview, Trends, and Outlook for 2025”, there has been an increase in the use of debt in a smaller number of transactions: while in 2023, $1.42 billion was raised in 57 deals, in 2024, financing obtained through this channel reached $1.63 billion in 40 rounds.

According to the same study, the average ticket for this financing solution in the region reached $41 million, well above the $7 million average in venture capital rounds. This figure reflects a different investor appetite and shows that debt remains the predominant source of capital in specific rounds, particularly in growth and late stages. In fact, as the same report by Endeavor and Glisco Partners points out, a third of the startups that raised capital in 2021 have raised new rounds of financing, with a significant proportion through debt.

On the other hand, according to the report ‘Trends in Tech 2025’, prepared by the Latin American Venture Capital and Private Equity Association (LAVCA), at least seven Latin American startups raised more than $60 million using this type of financing, compared to six in 2023.

The growth of venture debt is not only a response to a more demanding financial environment, but also to an evolution in the way scaleups and investors understand growth. It is no longer just about raising capital, but about building sustainable, diversified financial structures that are aligned with the strategic objectives of each stage. Some key elements for accessing this financing formula are:

• Recurring revenue and cash visibility. Venture debt providers look at metrics other than EBITDA, such as recurring revenue, runway, clear KPIs, and good cash flow control.
• Financial readiness. Founders must have a skilled CFO who can speak the same financial language and access venture debt.
• Upside for the financier. Since venture debt does not involve direct equity participation, financiers often require mechanisms such as warrants, which allow them to acquire shares in the company in the future at a pre-established price.

Technology assessment. With the emergence of innovations such as generative artificial intelligence, venture debt providers analyze the impact of these trends on the structures of high-growth companies.

The consolidation of this solution in Spain and Latin America marks a paradigm shift in startup financing. Far from replacing traditional venture capital, this modality has been integrated as a strategic complement that allows scaleups to extend their runway, optimize their capital structures, and maintain control during key phases of expansion.

In a macroeconomic environment that demands efficiency and resilience, high-growth companies that combine innovation with sustainable business models are finding venture debt to be an effective way to continue growing. In this context, BBVA Spark allows high-growth companies to access the advantages of this financing tool and offers other flexible financing solutions, adapted to the real growth cycle of startups and aligned with new scalability needs.