Run the Numbers

Venture Debt Explained: How Startup Lending Actually Works | Marshall Hawks

46 snips
Mar 9, 2026
Guest
Marshall Hawks
Marshall Hawks, a 20+ year venture lending veteran and author of Venture Debt Deals, walks through how startup lending is sized and structured. He covers the Series A/B sweet spot, why lenders underwrite the likelihood of a next raise, differences between banks and private credit, the three real repayment sources, and practical tips to run a venture debt process without blowing legal budgets.
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INSIGHT

Venture Debt Sweet Spot At Series A And B

  • Venture debt volume concentrates at Series A and B because lenders ride on equity diligence and prefer earlier-stage customer acquisition relationships.
  • Marshall Hawks says banks target these rounds to get long-term banking relationships and will finance follow-on needs as companies scale.
ADVICE

Time Venture Debt To Follow An Equity Raise

  • Time debt alongside an equity raise because lenders prefer to underwrite shortly after investors validate the company and when cash buffers exist.
  • Marshall Hawks recommends having ~18–24 months of cash post-equity to improve lender comfort.
INSIGHT

25–40% Rule Of Thumb For Deal Sizing

  • A common bank rule of thumb is lending roughly 25–40% of the last equity raise at Series A/B to avoid overleveraging.
  • Marshall Hawks notes this rule applies mostly to equity rounds under ~$50M and shifts to revenue multiples as companies scale.
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