Venture debt and venture capital are both forms of financing for startups, but they differ in their structure and implications:

1. Venture Debt: This is a loan provided to startups, typically secured against the company’s assets or future revenues. Repayment is expected over time, with interest. It is often used as a complement to venture capital to extend the runway without diluting equity.

2. Venture Capital: This involves selling a portion of your company’s equity to venture capitalists in exchange for funding. The venture capitalists will own a percentage of your company and typically have a say in major decisions.

Yes, like all financial instruments, venture debt comes with its risks:

1. Repayment Obligation: Unlike venture capital, where there’s no obligation to return the capital if the company fails, venture debt must be repaid with interest. This can strain the company’s finances, especially if revenue projections don’t materialize.

2. Default Consequences: If a company defaults on its venture debt, lenders may take control of assets, or in some cases, equity. This can lead to significant complications or even loss of control for the founders.