When raising debt works beautifully—and when it becomes a battle you can't win alone
Raising debt capital isn't a straightforward transaction. It's a strategic navigation through uncertain waters, where timing, market conditions, business model fit, and lender relationships determine whether you secure the capital you need—or find yourself stuck between unfavorable terms and equity dilution.
Through seven real client experiences, we explore the challenges companies face when navigating the debt markets alone, the frictions that make or break deals, and the critical moments when expert guidance transforms impossible situations into successful outcomes.
Story 1: When Time Isn't On Your Side
The Marketing Technology Company's Race Against the Clock
The CFO stared at the calendar on her screen. Six months. That's all the time they had before a substantial bullet payment came due on their existing term loan. In any other environment, this would be manageable—refinancing is standard operating procedure for growing companies. But this wasn't any other environment.
It was 2023, and the equity markets had turned brutally hostile. The company—a well-established customer engagement platform that had influenced over $4 billion in revenue for major brands—found itself in a precarious position. They had outgrown their previous lender, but capital markets were constricted. Traditional lenders were pulling back, rewriting their lending criteria, or simply going dark on new deals.
The Challenge: The company needed to refinance their existing loan before the bullet payment came due, while simultaneously securing enough capital availability to scale sustainably. They couldn't afford to simply swap one problem for another—they needed better terms, more flexibility, and a lender who understood their growth trajectory.
The Friction When Going It Alone: When companies approach debt markets during stressed periods without expert guidance, they face several compounding problems:
The Resolution: By engaging debt advisors early—before crisis mode set in—the company was able to run a true competitive process despite challenging market conditions. The advisors knew which lenders were actively deploying, what terms they could command, and how to position the company's story to resonate with different lender profiles.
The result: a complete refinancing of the existing loan with a new debt facility that offered better interest rates than the original loan, flexible terms designed for gradual scaling, and capital availability that relieved immediate financial pressure while preserving equity for growth initiatives.
When Debt Works: Engaging experts with 6-12 months of lead time allows companies to run competitive processes even in difficult markets, securing terms that reflect true market conditions rather than desperation pricing.
When It's Difficult: Time pressure without expert guidance often results in accepting the first term sheet offered—which is rarely the best available option—or missing opportunities with lenders you didn't know existed.
Story 2: When Your Banking Partner Pumps the Brakes
The Fleet Technology Company Faces Credit Market Tightening
For three years, the relationship had been straightforward. A growing fleet management software company—helping trucking companies automate vehicle maintenance by predicting failure points and optimizing repair timing—had a solid banking partner providing working capital. The partnership worked. Until it didn't.
As credit markets tightened and interest rates rose, the bank's risk appetite changed seemingly overnight. The account manager's tone shifted from supportive to cautious. Internal credit committees were applying new, more restrictive criteria. The company had a loan renewal approaching, and suddenly, their trusted banking partner was communicating clearly: we're limiting our lending exposure in your sector.
The Challenge: The company needed scalable capital to continue funding growth, but they'd never ventured beyond traditional banking relationships. They required a new lender quickly, but tighter credit conditions meant many doors were closing just as they needed them to open.
The Friction When Going It Alone: Building relationships with alternative lenders—venture debt funds, specialty lenders, private credit providers—from scratch takes time that companies in renewal situations don't have. Without existing relationships, companies waste months learning nuances through trial and error, pursuing dead-end conversations with lenders whose credit boxes simply can't accommodate them.
The Resolution: Through advisors with deep alternative lender relationships, the company ran a competitive process that surfaced multiple term sheets. They ultimately secured a $3.5MM CAD credit facility with minimal covenants, flexible draw schedules, and room to grow into more capital utilization over time. The new facility gave them financial flexibility to refinance existing bank debt while establishing avenues for capital growth.
When Debt Works: Proactively building diverse lender relationships before you need them urgently—or engaging advisors who already have those relationships—ensures you have options when traditional banking partnerships hit constraints.
When It's Difficult: Relying solely on traditional banking in a dynamic credit environment leaves companies exposed. When your bank says no, and you haven't cultivated alternatives, you're starting from zero at the worst possible moment.
Story 3: The Non-Traditional Business Model Trap
A Communications Platform Seeks Creative Capital
The pitch deck was compelling. A comprehensive customer engagement platform supporting SMS, chat, social media, email, web, bots, virtual agents, and automated campaign management. The company had a strong pipeline, impressive enterprise customer contracts sitting in their backlog waiting to be deployed, and a bright outlook. There was just one problem nobody wanted to talk about: they weren't a traditional SaaS company.
Technically, they operated as a Call Center as a Service (CCaaS)—a model that didn't fit neatly into the lending frameworks that most "go-to" venture debt providers used for underwriting.
The Challenge: The company needed growth capital to deploy its backlog of customer contracts without taking on additional equity dilution in challenging valuation markets. But traditional venture debt, predicated on predictable SaaS metrics—ARR, net retention rates, CAC payback periods—didn't translate cleanly to their business model. Several conventional lending solutions weren't available because the company didn't fit standard templates.
The Friction When Going It Alone: When your business model deviates from standard patterns, debt financing becomes exponentially harder. Lenders build credit models for specific business types. Companies with non-traditional models—marketplace businesses, usage-based pricing, professional services hybrids—often face blanket rejections not because they're truly risky, but because lenders lack frameworks to evaluate them.
The Resolution: By partnering with advisors who understood the company's unique space and knew which lenders had an appetite for non-standard structures, they quickly identified partners willing to look beyond textbook SaaS frameworks. The resulting debt facility provided the liquidity needed to accelerate deployment of customer contracts while maintaining equity for future rounds. The company ramped up operations faster, avoided dilution, and positioned itself to grow while entertaining equity offers on more favorable terms.
When Debt Works: Non-traditional business models can access debt financing when they find lenders with sector expertise and creative underwriting capabilities—connections that specialized advisors possess but most companies rarely have.
When It's Difficult: Without these specialized relationships, companies waste months pursuing dead-end conversations and eventually conclude that "debt financing isn't available for companies like us"—when in reality, the right lenders simply weren't in their network.
Story 4: Fighting the Fed
A FinTech Company's Battle Against Market Headwinds
As federal interest rates climbed throughout 2022 and 2023, a venture-backed direct-to-consumer mortgage lender using artificial intelligence technology faced multiple simultaneous headwinds. Rising rates were making their core product—mortgages—more expensive for consumers, cooling demand. Simultaneously, many lenders became reluctant to work with companies in industries directly affected by monetary policy changes.
Yet the company needed capital—to strengthen their balance sheet, fuel continued investment in their AI platform, and explore strategic acquisitions that would position them for eventual market recovery.
The Challenge: The market was working against them on every front. Traditional lenders were skittish about mortgage-related businesses. Rising interest rates made debt more expensive across the board. Equity market compression meant valuations were down, making equity financing unattractive.
The Friction When Going It Alone: Raising debt in hostile market conditions without expert guidance creates a painful dilemma. Companies face two seemingly inevitable outcomes: accept punitive terms (high interest rates, restrictive covenants, substantial warrant coverage) or give up on debt entirely and pursue equity at compressed valuations. Neither option serves long-term interests, yet both seem like the only paths forward.
The Resolution: By rigorously reviewing terms across a network of lenders and presenting the company's story strategically, advisors identified lenders who had mandates to deploy capital even in challenging markets and understood the mortgage industry's cyclicality. The company secured a flexible, committed debt facility with low fees and reasonable warrant coverage—favorable financing despite market softening. They raised funding without increasing equity dilution, allowing them to focus on revenue growth and explore acquisitions while many competitors couldn't access capital at any price.
When Debt Works: Even in challenging markets, experienced debt advisors know which lenders are still actively deploying, what terms truly reflect market conditions, and how to position companies to win in competitive situations.
When It's Difficult: Companies navigating alone often don't realize that some lenders remain active with reasonable terms—they either give up too early or accept the first (often worst) term sheet they receive because they lack negotiating leverage.
Story 5: The Pandemic Pivot
A Workplace Solutions Company Navigates Industry Transformation
The company had built a solid business providing modular, ventilated office pods for focused work, meetings, and open office layouts. Their products helped companies create customizable office spaces for improved productivity and collaboration. Then COVID-19 hit, and everything changed.
Office closures weren't temporary disruptions—they represented fundamental shifts in how people thought about workplace design. The company needed to pivot quickly, introducing new product offerings and expanding international sales channels to capitalize on the eventual "return to office" movement.
The Challenge: The company was burdened with an existing bank facility that wasn't serving their evolving needs. They needed a new lender who could help them manage cash flow through an uncertain transition period, provide additional capital to fund product innovation and international expansion, and support their preparation for a future equity round without forcing them to raise prematurely.
The Friction When Going It Alone: Companies facing industry disruption encounter skepticism at every turn. Lenders see negative headlines about "office space" and make snap judgments without understanding nuances. The friction compounds: sector stigma leads to automatic rejections, inadequate existing facilities don't have appetite to increase exposure, and it's difficult to convince lenders that your specific business is well-positioned when the broader sector faces headwinds.
The Resolution: Advisors helped the company articulate their opportunity clearly: the pandemic had accelerated conversations about office redesign, not eliminated them. Companies returning to offices wanted flexible, modular solutions exactly like theirs. With expert guidance engaging lenders and negotiating favorable terms, the company secured a term loan credit facility that took advantage of new revenue opportunities, empowered them to expand international sales channels, funded innovative product development, and positioned them to increase valuation before their next equity round.
When Debt Works: Industry disruption doesn't make debt impossible—it makes storytelling and lender selection critical. The right lenders with sector understanding see opportunities where generalists see only risk.
When It's Difficult: Without expert help, companies facing sector headwinds get lumped into broad negative categories. Even strong individual businesses struggle to get past initial screening calls.
Story 6: The Early-Stage Capital Burn
An EdTech Company Burns Cash Without Venture Backing
The mission was powerful: empowering educators to guide students through social and emotional learning competencies, helping students and teachers reconnect with their passions through programs that improved engagement, behavior, and academic success.
The challenge was equally powerful: the company was in a critical early growth phase, burning through cash quickly, and desperately needed capital to fuel the next stage of growth. The complication? They were bootstrapped, without traditional venture backing or the strong cash flow required for traditional bank loans.
The Challenge: The company faced a perfect storm: high cash burn rate requiring immediate capital infusion, no venture backing making traditional venture debt unavailable, insufficient cash flow eliminating traditional bank loan options, and growth-stage metrics that didn't fit lending templates built for mature companies. They were trapped in the middle—too risky for banks, not "venture-backed enough" for venture lenders.
The Friction When Going It Alone: Growth-stage companies without venture backing face a brutal lending landscape. Traditional venture debt doors are closed since most require institutional equity backing. Banks want profitability or hard assets. Alternative lenders who bridge this gap don't have the brand recognition or marketing presence of major banks. Limited options mean companies sometimes accept unfavorable structures out of necessity.
The Resolution: Advisors turned to their network to explore the full range of lending options, specifically targeting lenders with experience in growth-stage companies outside traditional venture paths who could underwrite based on business model strength and customer traction rather than just financial metrics. The company secured a $1.5MM venture debt facility for a new line of credit, infusing the company with growth capital despite high cash burn and lack of venture backing.
When Debt Works: Specialty lenders exist for nearly every company profile, but they're hard to find without established networks. Expert advisors know which lenders can underwrite non-traditional situations.
When It's Difficult: Companies assume that without venture backing, debt is impossible. They give up before finding the specialty lenders who would actually say yes.
Story 7: The Crypto Company's Credibility Challenge
A Bitcoin ATM Operator Seeks Growth Capital
The company operated a network of Bitcoin ATMs intended to help the world gain access to virtual currency. Their network offered a medium for the general public to buy, sell, and exchange digital currency, enabling users to familiarize themselves with emerging decentralized digital currency and process secure transactions.
The Challenge: The company had heavy R&D and engineering needs ahead as it continued to grow within the digital asset market. Being crypto-focused and with alternative investor backing, the market for lenders looking to lend was tight. Most capital providers in this space are largely equity-focused, with lenders being few and far between. The company was in the market for growth capital to continue fueling its growth ahead of its future equity round. Given the still lagging market interest from venture debt in crypto companies, their options for venture debt were limited compared to other, more 'traditional' technology companies.
The Friction When Going It Alone: Crypto and blockchain companies face unique stigma in traditional lending markets. Even well-established companies with strong unit economics struggle to get meetings because lenders categorically avoid the sector. Alternative investor backing (rather than traditional VC) further limits options. Finding the rare lenders willing to underwrite crypto businesses requires deep specialized knowledge of the lending landscape.
The Resolution: One of the most creative lending partners put together a $10MM Senior Secured Term Loan Facility to capitalize on the company without requiring any equity co-investment. With the facility in place, the company could continue to invest in mission-critical RD initiatives that would fuel the growth of the business as it looked to raise its next round of capital. The $10MM credit facility funded their continued growth through 2022 as they approached their next round of funding in a stronger position with more leverage in liquidity on the balance sheet.
When Debt Works: Even in emerging or stigmatized sectors like crypto, specialized lenders exist who understand the space and can structure creative solutions. Finding them requires deep networks and sector expertise.
When It's Difficult: Entire sectors can be effectively blacklisted by mainstream lenders. Companies going alone in these sectors waste enormous time on rejections before realizing they need specialized introductions to niche lenders who actually understand their business.
The Common Thread: Information Asymmetry
Across these seven stories, a clear pattern emerges. The biggest friction companies face when raising debt alone isn't a lack of creditworthiness or strong business fundamentals—it's information asymmetry.
Lenders have better information than borrowers about:
This asymmetry grows more pronounced during periods of market stress. When credit conditions tighten, lenders know which of their peers are still active while borrowers are flying blind.
When debt raises work smoothly, it's because companies have bridged this information gap—either through extensive personal networks, prior experience, or by engaging advisors who live in the debt markets daily. When debt raises become difficult, it's often because companies are operating with incomplete information: pursuing lenders who aren't a fit, accepting terms that aren't market-rate, or missing opportunities they never knew existed.
Lessons Learned: When to Raise Debt, When to Get Help
Debt Works Best When:
Debt Becomes Difficult When:
Expert Guidance Matters Most When:
The venture debt market isn't monolithic—it's a complex ecosystem of banks, venture debt funds, private credit providers, and specialty lenders, each with different appetites, underwriting frameworks, and capital deployment mandates. The difference between a successful debt raise and a failed one often comes down not to the quality of the business, but to whether the company has access to the right information and relationships at the right time.
These seven stories illustrate a fundamental truth: raising debt capital alone means operating with one hand tied behind your back. You're playing a game where the other side has perfect information, and you're guessing. You're navigating a landscape where hidden paths lead to success, but you can only see the obvious (often wrong) routes.
The companies that successfully navigate this ecosystem share a common trait: they don't go it alone. They either have extensive prior experience, deep personal networks in the lending community, or they engage advisors who have built those relationships over years of specialization. In venture debt, like many complex markets, it's not what you know—it's who you know, and more importantly, who knows you.
Raising debt capital isn't a straightforward transaction. It's a strategic navigation through uncertain waters, where timing, market conditions, business model fit, and lender relationships determine whether you secure the capital you need—or find yourself stuck between unfavorable terms and equity dilution.
Through seven real client experiences, we explore the challenges companies face when navigating the debt markets alone, the frictions that make or break deals, and the critical moments when expert guidance transforms impossible situations into successful outcomes.
Story 1: When Time Isn't On Your Side
The Marketing Technology Company's Race Against the Clock
The CFO stared at the calendar on her screen. Six months. That's all the time they had before a substantial bullet payment came due on their existing term loan. In any other environment, this would be manageable—refinancing is standard operating procedure for growing companies. But this wasn't any other environment.
It was 2023, and the equity markets had turned brutally hostile. The company—a well-established customer engagement platform that had influenced over $4 billion in revenue for major brands—found itself in a precarious position. They had outgrown their previous lender, but capital markets were constricted. Traditional lenders were pulling back, rewriting their lending criteria, or simply going dark on new deals.
The Challenge: The company needed to refinance their existing loan before the bullet payment came due, while simultaneously securing enough capital availability to scale sustainably. They couldn't afford to simply swap one problem for another—they needed better terms, more flexibility, and a lender who understood their growth trajectory.
The Friction When Going It Alone: When companies approach debt markets during stressed periods without expert guidance, they face several compounding problems:
- Limited visibility into which lenders are actually deploying capital versus just taking meetings
- No benchmark for what terms are truly market-rate versus opportunistically expensive
- Time compression that forces reactive decisions rather than strategic positioning
- Information asymmetry—lenders know more about market conditions than individual borrowers
- Single-threading risk—pursuing lenders sequentially wastes precious time when parallel processes are critical
The Resolution: By engaging debt advisors early—before crisis mode set in—the company was able to run a true competitive process despite challenging market conditions. The advisors knew which lenders were actively deploying, what terms they could command, and how to position the company's story to resonate with different lender profiles.
The result: a complete refinancing of the existing loan with a new debt facility that offered better interest rates than the original loan, flexible terms designed for gradual scaling, and capital availability that relieved immediate financial pressure while preserving equity for growth initiatives.
When Debt Works: Engaging experts with 6-12 months of lead time allows companies to run competitive processes even in difficult markets, securing terms that reflect true market conditions rather than desperation pricing.
When It's Difficult: Time pressure without expert guidance often results in accepting the first term sheet offered—which is rarely the best available option—or missing opportunities with lenders you didn't know existed.
Story 2: When Your Banking Partner Pumps the Brakes
The Fleet Technology Company Faces Credit Market Tightening
For three years, the relationship had been straightforward. A growing fleet management software company—helping trucking companies automate vehicle maintenance by predicting failure points and optimizing repair timing—had a solid banking partner providing working capital. The partnership worked. Until it didn't.
As credit markets tightened and interest rates rose, the bank's risk appetite changed seemingly overnight. The account manager's tone shifted from supportive to cautious. Internal credit committees were applying new, more restrictive criteria. The company had a loan renewal approaching, and suddenly, their trusted banking partner was communicating clearly: we're limiting our lending exposure in your sector.
The Challenge: The company needed scalable capital to continue funding growth, but they'd never ventured beyond traditional banking relationships. They required a new lender quickly, but tighter credit conditions meant many doors were closing just as they needed them to open.
The Friction When Going It Alone: Building relationships with alternative lenders—venture debt funds, specialty lenders, private credit providers—from scratch takes time that companies in renewal situations don't have. Without existing relationships, companies waste months learning nuances through trial and error, pursuing dead-end conversations with lenders whose credit boxes simply can't accommodate them.
The Resolution: Through advisors with deep alternative lender relationships, the company ran a competitive process that surfaced multiple term sheets. They ultimately secured a $3.5MM CAD credit facility with minimal covenants, flexible draw schedules, and room to grow into more capital utilization over time. The new facility gave them financial flexibility to refinance existing bank debt while establishing avenues for capital growth.
When Debt Works: Proactively building diverse lender relationships before you need them urgently—or engaging advisors who already have those relationships—ensures you have options when traditional banking partnerships hit constraints.
When It's Difficult: Relying solely on traditional banking in a dynamic credit environment leaves companies exposed. When your bank says no, and you haven't cultivated alternatives, you're starting from zero at the worst possible moment.
Story 3: The Non-Traditional Business Model Trap
A Communications Platform Seeks Creative Capital
The pitch deck was compelling. A comprehensive customer engagement platform supporting SMS, chat, social media, email, web, bots, virtual agents, and automated campaign management. The company had a strong pipeline, impressive enterprise customer contracts sitting in their backlog waiting to be deployed, and a bright outlook. There was just one problem nobody wanted to talk about: they weren't a traditional SaaS company.
Technically, they operated as a Call Center as a Service (CCaaS)—a model that didn't fit neatly into the lending frameworks that most "go-to" venture debt providers used for underwriting.
The Challenge: The company needed growth capital to deploy its backlog of customer contracts without taking on additional equity dilution in challenging valuation markets. But traditional venture debt, predicated on predictable SaaS metrics—ARR, net retention rates, CAC payback periods—didn't translate cleanly to their business model. Several conventional lending solutions weren't available because the company didn't fit standard templates.
The Friction When Going It Alone: When your business model deviates from standard patterns, debt financing becomes exponentially harder. Lenders build credit models for specific business types. Companies with non-traditional models—marketplace businesses, usage-based pricing, professional services hybrids—often face blanket rejections not because they're truly risky, but because lenders lack frameworks to evaluate them.
The Resolution: By partnering with advisors who understood the company's unique space and knew which lenders had an appetite for non-standard structures, they quickly identified partners willing to look beyond textbook SaaS frameworks. The resulting debt facility provided the liquidity needed to accelerate deployment of customer contracts while maintaining equity for future rounds. The company ramped up operations faster, avoided dilution, and positioned itself to grow while entertaining equity offers on more favorable terms.
When Debt Works: Non-traditional business models can access debt financing when they find lenders with sector expertise and creative underwriting capabilities—connections that specialized advisors possess but most companies rarely have.
When It's Difficult: Without these specialized relationships, companies waste months pursuing dead-end conversations and eventually conclude that "debt financing isn't available for companies like us"—when in reality, the right lenders simply weren't in their network.
Story 4: Fighting the Fed
A FinTech Company's Battle Against Market Headwinds
As federal interest rates climbed throughout 2022 and 2023, a venture-backed direct-to-consumer mortgage lender using artificial intelligence technology faced multiple simultaneous headwinds. Rising rates were making their core product—mortgages—more expensive for consumers, cooling demand. Simultaneously, many lenders became reluctant to work with companies in industries directly affected by monetary policy changes.
Yet the company needed capital—to strengthen their balance sheet, fuel continued investment in their AI platform, and explore strategic acquisitions that would position them for eventual market recovery.
The Challenge: The market was working against them on every front. Traditional lenders were skittish about mortgage-related businesses. Rising interest rates made debt more expensive across the board. Equity market compression meant valuations were down, making equity financing unattractive.
The Friction When Going It Alone: Raising debt in hostile market conditions without expert guidance creates a painful dilemma. Companies face two seemingly inevitable outcomes: accept punitive terms (high interest rates, restrictive covenants, substantial warrant coverage) or give up on debt entirely and pursue equity at compressed valuations. Neither option serves long-term interests, yet both seem like the only paths forward.
The Resolution: By rigorously reviewing terms across a network of lenders and presenting the company's story strategically, advisors identified lenders who had mandates to deploy capital even in challenging markets and understood the mortgage industry's cyclicality. The company secured a flexible, committed debt facility with low fees and reasonable warrant coverage—favorable financing despite market softening. They raised funding without increasing equity dilution, allowing them to focus on revenue growth and explore acquisitions while many competitors couldn't access capital at any price.
When Debt Works: Even in challenging markets, experienced debt advisors know which lenders are still actively deploying, what terms truly reflect market conditions, and how to position companies to win in competitive situations.
When It's Difficult: Companies navigating alone often don't realize that some lenders remain active with reasonable terms—they either give up too early or accept the first (often worst) term sheet they receive because they lack negotiating leverage.
Story 5: The Pandemic Pivot
A Workplace Solutions Company Navigates Industry Transformation
The company had built a solid business providing modular, ventilated office pods for focused work, meetings, and open office layouts. Their products helped companies create customizable office spaces for improved productivity and collaboration. Then COVID-19 hit, and everything changed.
Office closures weren't temporary disruptions—they represented fundamental shifts in how people thought about workplace design. The company needed to pivot quickly, introducing new product offerings and expanding international sales channels to capitalize on the eventual "return to office" movement.
The Challenge: The company was burdened with an existing bank facility that wasn't serving their evolving needs. They needed a new lender who could help them manage cash flow through an uncertain transition period, provide additional capital to fund product innovation and international expansion, and support their preparation for a future equity round without forcing them to raise prematurely.
The Friction When Going It Alone: Companies facing industry disruption encounter skepticism at every turn. Lenders see negative headlines about "office space" and make snap judgments without understanding nuances. The friction compounds: sector stigma leads to automatic rejections, inadequate existing facilities don't have appetite to increase exposure, and it's difficult to convince lenders that your specific business is well-positioned when the broader sector faces headwinds.
The Resolution: Advisors helped the company articulate their opportunity clearly: the pandemic had accelerated conversations about office redesign, not eliminated them. Companies returning to offices wanted flexible, modular solutions exactly like theirs. With expert guidance engaging lenders and negotiating favorable terms, the company secured a term loan credit facility that took advantage of new revenue opportunities, empowered them to expand international sales channels, funded innovative product development, and positioned them to increase valuation before their next equity round.
When Debt Works: Industry disruption doesn't make debt impossible—it makes storytelling and lender selection critical. The right lenders with sector understanding see opportunities where generalists see only risk.
When It's Difficult: Without expert help, companies facing sector headwinds get lumped into broad negative categories. Even strong individual businesses struggle to get past initial screening calls.
Story 6: The Early-Stage Capital Burn
An EdTech Company Burns Cash Without Venture Backing
The mission was powerful: empowering educators to guide students through social and emotional learning competencies, helping students and teachers reconnect with their passions through programs that improved engagement, behavior, and academic success.
The challenge was equally powerful: the company was in a critical early growth phase, burning through cash quickly, and desperately needed capital to fuel the next stage of growth. The complication? They were bootstrapped, without traditional venture backing or the strong cash flow required for traditional bank loans.
The Challenge: The company faced a perfect storm: high cash burn rate requiring immediate capital infusion, no venture backing making traditional venture debt unavailable, insufficient cash flow eliminating traditional bank loan options, and growth-stage metrics that didn't fit lending templates built for mature companies. They were trapped in the middle—too risky for banks, not "venture-backed enough" for venture lenders.
The Friction When Going It Alone: Growth-stage companies without venture backing face a brutal lending landscape. Traditional venture debt doors are closed since most require institutional equity backing. Banks want profitability or hard assets. Alternative lenders who bridge this gap don't have the brand recognition or marketing presence of major banks. Limited options mean companies sometimes accept unfavorable structures out of necessity.
The Resolution: Advisors turned to their network to explore the full range of lending options, specifically targeting lenders with experience in growth-stage companies outside traditional venture paths who could underwrite based on business model strength and customer traction rather than just financial metrics. The company secured a $1.5MM venture debt facility for a new line of credit, infusing the company with growth capital despite high cash burn and lack of venture backing.
When Debt Works: Specialty lenders exist for nearly every company profile, but they're hard to find without established networks. Expert advisors know which lenders can underwrite non-traditional situations.
When It's Difficult: Companies assume that without venture backing, debt is impossible. They give up before finding the specialty lenders who would actually say yes.
Story 7: The Crypto Company's Credibility Challenge
A Bitcoin ATM Operator Seeks Growth Capital
The company operated a network of Bitcoin ATMs intended to help the world gain access to virtual currency. Their network offered a medium for the general public to buy, sell, and exchange digital currency, enabling users to familiarize themselves with emerging decentralized digital currency and process secure transactions.
The Challenge: The company had heavy R&D and engineering needs ahead as it continued to grow within the digital asset market. Being crypto-focused and with alternative investor backing, the market for lenders looking to lend was tight. Most capital providers in this space are largely equity-focused, with lenders being few and far between. The company was in the market for growth capital to continue fueling its growth ahead of its future equity round. Given the still lagging market interest from venture debt in crypto companies, their options for venture debt were limited compared to other, more 'traditional' technology companies.
The Friction When Going It Alone: Crypto and blockchain companies face unique stigma in traditional lending markets. Even well-established companies with strong unit economics struggle to get meetings because lenders categorically avoid the sector. Alternative investor backing (rather than traditional VC) further limits options. Finding the rare lenders willing to underwrite crypto businesses requires deep specialized knowledge of the lending landscape.
The Resolution: One of the most creative lending partners put together a $10MM Senior Secured Term Loan Facility to capitalize on the company without requiring any equity co-investment. With the facility in place, the company could continue to invest in mission-critical RD initiatives that would fuel the growth of the business as it looked to raise its next round of capital. The $10MM credit facility funded their continued growth through 2022 as they approached their next round of funding in a stronger position with more leverage in liquidity on the balance sheet.
When Debt Works: Even in emerging or stigmatized sectors like crypto, specialized lenders exist who understand the space and can structure creative solutions. Finding them requires deep networks and sector expertise.
When It's Difficult: Entire sectors can be effectively blacklisted by mainstream lenders. Companies going alone in these sectors waste enormous time on rejections before realizing they need specialized introductions to niche lenders who actually understand their business.
The Common Thread: Information Asymmetry
Across these seven stories, a clear pattern emerges. The biggest friction companies face when raising debt alone isn't a lack of creditworthiness or strong business fundamentals—it's information asymmetry.
Lenders have better information than borrowers about:
- Market terms and what's truly competitive versus opportunistic
- Which lenders are actively deploying capital in any given market environment
- Which financing partners have an appetite for specific business models or sectors
- How to structure deals to maximize flexibility while minimizing cost
- What covenant packages are standard versus restrictive
This asymmetry grows more pronounced during periods of market stress. When credit conditions tighten, lenders know which of their peers are still active while borrowers are flying blind.
When debt raises work smoothly, it's because companies have bridged this information gap—either through extensive personal networks, prior experience, or by engaging advisors who live in the debt markets daily. When debt raises become difficult, it's often because companies are operating with incomplete information: pursuing lenders who aren't a fit, accepting terms that aren't market-rate, or missing opportunities they never knew existed.
Lessons Learned: When to Raise Debt, When to Get Help
Debt Works Best When:
- You have 6-12 months of runway before you need the capital (not 6 weeks)
- You want to extend runway between equity rounds without dilution
- Your business has predictable revenue or asset-based collateral
- Market conditions are favorable, or you have expert guidance to navigate difficult markets
- You're refinancing existing debt and can run a competitive process
- You need capital to reach profitability or your next valuation milestone
Debt Becomes Difficult When:
- You're in crisis mode with immediate liquidity needs
- Your business model doesn't fit traditional lending frameworks
- Market conditions are stressed and you don't know which lenders are still active
- You have limited banking or lender relationships
- You're negotiating complex terms without understanding market standards
- Your sector is facing headwinds and you don't know how to articulate your specific opportunity
- You lack the financial metrics lenders typically require (ARR, profitability, venture backing)
Expert Guidance Matters Most When:
- Time is tight and you can't afford to waste months on dead-end lender conversations
- Market conditions are challenging and you need to know which lenders are still deploying
- Your business model is non-traditional and requires creative structuring
- You're navigating refinancing, bullet payments, or complex existing obligations
- You need to understand whether the terms you're being offered are truly market-rate
- Your sector faces stigma or headwinds that require specialized lender introductions
- You lack venture backing or don't fit traditional lender profiles
The venture debt market isn't monolithic—it's a complex ecosystem of banks, venture debt funds, private credit providers, and specialty lenders, each with different appetites, underwriting frameworks, and capital deployment mandates. The difference between a successful debt raise and a failed one often comes down not to the quality of the business, but to whether the company has access to the right information and relationships at the right time.
These seven stories illustrate a fundamental truth: raising debt capital alone means operating with one hand tied behind your back. You're playing a game where the other side has perfect information, and you're guessing. You're navigating a landscape where hidden paths lead to success, but you can only see the obvious (often wrong) routes.
The companies that successfully navigate this ecosystem share a common trait: they don't go it alone. They either have extensive prior experience, deep personal networks in the lending community, or they engage advisors who have built those relationships over years of specialization. In venture debt, like many complex markets, it's not what you know—it's who you know, and more importantly, who knows you.