DealFlow Events

Direct Lending vs. Venture Lending: Understanding Where the Real Risks Are I’ve been reading a lot of LinkedIn posts and articles about the rising challenges in direct lending: higher leverage, more defaults, and growing losses. It’s a valid concern. But I think these problems are more pronounced in larger corporate loans, which tend to move closely with the broader economy. In contrast, innovation lending — venture debt and growth credit — behaves differently. Correlations to the macro environment tend to be lower because company-specific (idiosyncratic) risk dominates in sectors like software, AI, and biotechnology. Each company’s outcome hinges more on leadership, execution, and product-market fit than GDP or interest rates. That said, I’m looking forward to speaking with other venture lenders attending the Private Credit Sourcing Conference, hosted by DealFlow Events, on October 20–21 in New York City, to compare notes on what risks they’re seeing — both current and emerging. At Applied Real Intelligence LLC ("A.R.I."), we approach every deal with a risk-first mindset. That’s a philosophy built from my two decades in capital markets, navigating complex credits in media, tech, and telecom during the Global Financial Crisis of 2008–2010, and over $50 billion in debt transactions in loans of all sizes, corporate bonds, and credit derivatives. I even dedicated my master’s at the NYU Stern School of Business entirely to enterprise risk management. For founders who find themselves in a tough spot, two simple pieces of advice: 1️⃣ Be truthful. Hiding problems from your lender, investors, or team will always make things worse. 2️⃣ Be respectful. Taking an adversarial approach with your senior secured lender is a losing strategy. They hold all the cards — but they’re also people. Respect and transparency go a long way toward finding a constructive solution. Remember: lenders talk, particularly in the niche segment of venture debt. Burning a lender can make a company unbankable with everyone else. Founders are legally required to disclose defaults and bankruptcies, and capital providers move on quickly when they see that on a record. I'm looking forward to meaningful discussions at this event about where the real risks lie and how thoughtful lenders are managing them intelligently. If you're a lender or founder, please send me a message if you want to meet at the event. #PrivateCredit #VentureDebt #GrowthCredit #InnovationEconomy #RiskManagement #Startups #VentureCapital #DirectLending