The One Use Case for Venture Debt That Most Founders Never Think About

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May 12, 2025

Catherine Jhung, a Senior Managing Director at Hercules Capital, shares her expertise in venture lending, focusing on the evolving landscape of venture debt. She explores how CFOs can leverage debt to boost equity valuations, emphasizing the delicate balance between flexibility and rates. The conversation highlights the intricate dynamics between VCs and debt providers, and when it's prudent for startups to approach lenders. Catherine also discusses the critical role of storytelling in a CFO's journey and how her sales background informs her approach to financing.

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INSIGHT

Evaluate Lender Commitment

Lenders value track record of supporting companies through tough times more than just growth plans.
CFOs should research lenders’ commitment and behavior during downturns before borrowing.

ADVICE

Be Realistic With Lenders

Share your worst-case or guaranteed plan with lenders, not your aggressive fundraising plan.
Structure deals based on realistic forecasts rather than optimistic revenue targets.

ADVICE

Venture Debt Boosts Equity Valuation

Use venture debt as leverage to negotiate higher equity valuations.
Having accessible cash on your balance sheet strengthens your negotiating position with equity investors.

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The venture debt landscape has changed dramatically over the past few years, and CFOs can’t afford to be left behind. Catherine Jhung, Senior Managing Director at Hercules Capital and a seasoned expert in venture lending, joins CJ to explore the landscape of venture debt in 2025. Together, they unpack important questions for CFOs approaching lenders, the delicate balance between rate and flexibility, and a surprisingly overlooked use case for venture debt. You’ll also hear when not to raise debt, how to determine the right amount for your capital stack, what really separates banks from private debt funds, and the complex dance between VCs and debt providers. Plus, Catherine sheds light on the concept of capital as a commodity and how her early career in sales shaped her approach to selling the one thing every company needs: capital.

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LINKS:

Catherine Jhung on LinkedIn: https://www.linkedin.com/in/catherine-jhung-she-her-434732/

Hercules Capital:

https://www.htgc.com/

Ventured Growth: https://www.htgc.com/category/podcast/

CJ on X (@cjgustafson222): https://x.com/cjgustafson222

Mostly metrics:

http://mostlymetrics.com

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TIMESTAMPS:

(00:00) Preview and Intro

(02:35) Sponsor – Rippling Spend | Pulley | Tropic

(07:29) The Questions CFOs Should Be Asking Lenders in 2025

(09:31) Three Plans CFOs Should Have When Approaching a Lender

(12:26) The Levers of Pricing and Flexibility

(14:45) Sponsor – NetSuite | Planful | Tabs

(18:50) How Hercules Differs From a Bank

(22:30) A Great Use Case for Venture Debt That Founders Rarely Think About

(23:47) Determining the Appropriate Amount of Debt for a Capital Stack

(27:38) When Not To Raise Venture Debt

(29:23) The Major Players in the Venture Debt Landscape Today

(31:37) Syndicated Deals Between Banks and Private Debt Funds

(35:15) VCs Versus Venture Debt Firms

(39:07) Building Relationships in the Venture Ecosystem

(39:06) Catherine’s History in Sales

(42:43) A Sales Skill That Made Catherine a Better Investor

(46:57) How To Differentiate Selling Capital as a Commodity

(49:22) What Catherine Learned About Finance and Leadership From Her Podcast

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