The fourth annual report presents a data-driven analysis of the global venture debt and growth lending landscape across India, the Gulf Cooperation Council (GCC), Southeast Asia, and Europe.

As venture capital purse strings tighten, founders are turning to alternative funding avenues. The report reveals Europe’s venture debt and growth lending market reached $19.78 billion in 2024, a 21% CAGR since 2018. While deal volumes declined due to macroeconomic pressures, adoption of structured debt continues to deepen across the continent.

“Venture debt is increasingly establishing itself as a crucial financing tool in the global venture ecosystem. As this asset class expands, it plays a vital role in helping founders scale efficiently while preserving equity. Yet, it remains underutilised in many markets – offering untapped potential,” said Sebastian Drescher, Partner, Kearney. “As a former founder, I understand the need for diverse financing avenues. The next phase of growth will depend on how well global ecosystems integrate venture debt as a mainstream instrument.”

Europe’s venture debt landscape is undergoing a shift, with the UK emerging as the most active market, responsible for approximately 18% of all venture debt and growth lending deals in 2024. Late-stage companies attracted 82% of the total value deployed through venture debt/growth lending. In a survey of more than 200 founders, venture capitalists, and investors, 82% pointed to growth financing as the primary use case for this form of funding. Fintech remained the dominant sector for venture debt/growth lending deployment in FY26. The survey projected fintech would draw the highest share of venture debt at 47%, followed by healthtech at 28%, and cleantech at 25% – signalling a gradual tilt towards mission-driven sectors with stronger regulatory resilience.

Despite macroeconomic challenges that reduced European deal volume from 967 in 2023 to 589 in 2024, the ratio of venture debt to VC funding rose from 16% in 2018 to 30% in 2024 – underscoring continued momentum.

Geoff Whiteland, Senior Director, British Business Bank, commented on the trends he has seen in the market: “Over the last couple of years, the exits in the market are just not happening as quickly as they were five/six years ago. What I see with a lot of growth businesses is that they are working on their continued growth, rather than getting more and more VC money into the business. And there are a lot more established businesses with higher recurring revenues that are looking for venture debt as well.”

Europe’s regulatory environment has remained fragmented, lacking a standardised definition of venture debt. While “growth lending” became the more prevalent term to describe non-dilutive debt tailored to venture-backed, high-growth firms – often at later stages of scaling – it encompasses a wide range of structured instruments, from term loans to asset-backed and warehouse financing.

In the UK, regulatory changes through Mansion House reforms and updates by the Financial Conduct Authority (FCA) aimed to unlock over £1 billion in pension capital and promote a more transparent, innovation-friendly ecosystem for funding.

“The European growth lending ecosystem is at an inflection point – scaling fast, maturing steadily, and moving beyond traditional equity-first mindsets,” said Ravneet Mann, Partner (UK), Stride Ventures. “The UK, in particular, is cementing its status as Europe’s most active venture debt hub, underpinned by progressive reforms, late-stage startup activity, and strong institutional participation. This report aims to offer clarity, benchmarks, and foresight for founders, investors, and regulators navigating this evolving capital landscape.”

Europe’s venture debt market reflects a sense of maturity and depth, yet adoption remains uneven across the region. In contrast, the GCC witnessed rapid acceleration, with venture debt growing at a compound annual rate of 54% between 2018 and 2024. Meanwhile, India’s venture debt market reached $1.23 billion in 2024 – equivalent to just 10% of its total VC flow – pointing to substantial headroom for expansion.

Europe continued to demonstrate strength in deal value and institutional interest. However, the lack of a harmonised regulatory framework posed a barrier to innovation and fluid cross-border capital movement. Realising the region’s potential would require a broader, more diverse lender ecosystem – currently made up of around 30 active players, compared to over 250 in the US – and geographic expansion beyond its dominant markets in the UK, Germany, France, and the Netherlands.

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