Venture Debt in the German Market – Distinction from the Legal Institution of the Shareholder Loan and Equivalent Third-Party Loans

Venture debt, that is to say risk loans, is still a relatively new and innovative financing instrument in the German venture capital and start-up scene. In essence, it is a form of debt financing – originating from the Anglo-American region – which is granted by specialised providers, mostly private debt funds, to suitable growth companies (scale-ups/later stage start-ups). In the current difficult market environment for equity rounds, venture debt may play an even greater role in financing innovations in the future than it has in the past.