Venture debt or revenue-based financing: a decision framework in one page

Venture debt is priced against your last equity round and usually against your investor base. It comes with covenants, sometimes warrants, and a fixed repayment schedule that does not care what happened to your quarter.

Revenue-based financing is priced against your revenue and repaid from it. Slow month, smaller payment. Fast month, faster amortisation.

Choose venture debt when you have a strong recent round, an investor base willing to stand behind the credit and a defined use of proceeds with a hard date. Choose revenue-based financing when your revenue is recurring, your margins carry the payment and you want to avoid resetting your valuation.

Choose neither when the plan only works if everything goes right. Debt in any form removes optionality exactly when you need it most.