Venture-debt lenders tighten after a cluster of AI-adjacent missed covenants
The second check is no longer automatic.
Priya NairFinance Reporter
Startup office and laptops
SAN FRANCISCO — Venture debt had a long run pretending to be cheap equity with a coupon. That run is over for any borrower whose AI revenue is still a slide. Lenders said a small cluster of missed coverage tests was enough to reprice the whole book.
New term sheets feature tighter cash sweeps, shorter interest-only periods, and a livelier debate about warrants. Founders who treated the facility as non-dilutive working capital are being asked to remember that it is debt.
The healthy companies will refinance. The others will learn that a GPU bill is not collateral.
Priya Nair
Finance Reporter
Writes on banks, private credit, and the regulatory perimeter around nonbank lenders.