Venture Debt Explained: How Startup Lending Actually Works | Marshall Hawks

CJ sits down with Marshall Hawks, a 20-year veteran of venture lending and author of Venture Debt Deals. They cover the real rules of thumb behind deal sizing, why lenders underwrite likelihood of raising again (not breakout outcomes), how banks and private credit differ, the three real sources of repayment, and how to actually run a venture debt process without blowing your legal budget.---SPONSORS:Tabs is an AI-native revenue platform that unifies billing, collections, and revenue recognition for companies running usage-based or complex contracts. By bringing together ERP, CRM, and real product usage data into a single system of record, Tabs eliminates manual reconciliations and speeds up close and cash collection. Companies like Cortex, Statsig, and Cursor trust Tabs to scale revenue efficiently. Learn more at https://www.tabs.com/runAbacum is a modern FP&A platform built by former CFOs to replace slow, consultant-heavy planning tools. With self-service integrations and AI-powered workflows for forecasting, variance analysis, and scenario modeling, Abacum helps finance teams scale without becoming software admins. Trusted by teams at Strava, Replit, and JG Wentworth—learn more at https://www.abacum.aiBrex is an intelligent finance platform that combines corporate cards, built-in expense management, and AI agents to eliminate manual finance work. By automating expense reviews and reconciliations, Brex gives CFOs more time for the high-impact work that drives growth. Join 35,000+ companies like Anthropic, Coinbase, and DoorDash at https://www.brex.com/metricsMetronome is real-time billing built for modern software companies. Metronome turns raw usage events into accurate invoices, gives customers bills they actually understand, and keeps finance, product, and engineering perfectly in sync. That's why category-defining companies like OpenAI and Anthropic trust Metronome to power usage-based pricing and enterprise contracts at scale. Focus on your product — not your billing. Learn more and get started at https://www.metronome.comRightRev is an automated revenue recognition platform built for modern pricing models like usage-based pricing, bundles, and mid-cycle upgrades. RightRev lets companies scale monetization without slowing down close or compliance. For RevRec that keeps growth moving, visit https://www.rightrev.comRillet is an AI-native ERP built for modern finance teams that want to close faster without fighting legacy systems. Designed to support complex revenue recognition, multi-entity operations, and real-time reporting, Rillet helps teams achieve a true zero-day close—with some customers closing in hours, not days. If you're scaling on an ERP that wasn't built in the 90s, book a demo at https://www.rillet.com/cjLINKS:Mostly Talent: https://mostlymetrics.typeform.com/to/cLTxtAsNMarshall: https://www.linkedin.com/in/marshallhawks/Marshall's website: https://www.marshallhawks.comCJ: https://www.linkedin.com/in/cj-gustafson-13140948/Mostly metrics: https://www.mostlymetrics.comTIMESTAMPS:0:00 Preview and intro3:23 Marshall's background and the book4:47 Venture Deals as inspiration6:30 Companies Marshall has worked with6:49 The venture debt sweet spot8:01 Why venture debt follows equity raises10:55 The 25–40% rule of thumb12:08 AI companies and the limits of the rule13:58 Sponsors — Abacum | Brex | Metronome17:15 How lenders think vs. investors19:12 The three sources of repayment21:37 Venture debt and the AI boom23:52 Banks vs. private credit26:28 Sponsors — RightRev | Rillet | Tabs29:57 Private credit pricing and warrants33:04 Syndicated deals35:04 Legal timelines38:13 Who pays the legal bill?40:06 Why your GC shouldn't quarterback the deal41:30 What forecast to give your lender43:37 Reporting cadence45:57 Bad news should travel fast47:49 The Twitch case study50:19 Are we over our skis in 2026?54:50 Where to get Venture Debt Deals55:09 Credits