Venture debt in Italy: how it works, what it costs, who lends

On 3 September 2026 the European Investment Bank announced up to €20 million for Tensive, a Milan medtech company developing a bioresorbable breast implant. It isn’t a grant, or an equity round. It’s a convertible loan (debt that can later turn into shares), paid in two tranches and backed by the EU’s InvestEU programme.

That’s venture debt, a tool Europe uses far more than Italy does. This guide covers venture debt in Italy from the founder’s side of the table: when it makes sense, how a deal is built, what it really costs, who lends, what can go wrong and what a lender reads first. New to fundraising? Start from the beginner’s map, from zero to a first round.

What is venture debt, and when does it make sense?

Put simply, it’s a loan to a startup that already has venture capital behind it. The lender can’t rely on years of profits or a warehouse full of assets, because you probably have neither. So it leans on your investors and on the round you’ve just closed. Carta’s guide puts it plainly: borrowers ‘almost always raise venture debt in connection with an equity financing round’.

The natural moment, then, is right after a Series A (the first large round led by a professional fund) or a big seed round. The loan stretches your runway, the months of cash left at your current burn, to a milestone before the next round. It can also fund capex, meaning plants and machines, or working capital as sales grow. BeDimensional, a graphene spin-off of the Istituto Italiano di Tecnologia, used its EIB loan for new production plants in Italy.

What venture debt doesn’t do is replace your first equity. First Citizens Innovation Banking, which carries on SVB’s startup lending, looks for ‘at least $4M in a single equity round’, and the EIB lends only to companies that have ‘already raised equity from professional investors’. So step one is still raising venture capital in Italy. If the round names are new, read the funding stages from bootstrapping to Series C first.

How does a venture debt deal work?

Six terms decide most of it. Here they are, with the ranges published by lenders and lawyers.

Term	What it means	Typical range
Amount	Sized on your last equity round, not on your revenue	20% to 40% of the last round (Blakes, First Citizens), or 6% to 8% of the post-money valuation
Interest	Paid monthly in cash, or partly added to the loan (‘payment in kind’)	10% to 15% fixed, or 7% to 12% over Euribor, the euro interbank rate (Growth Capital via MF, April 2026)
Warrants	The right to buy shares later at a price fixed today	5% to 20% of the loan; once exercised, usually up to 2% of the company (Blakes)
Interest-only period	The months when you pay interest but no principal	12 months on average, then three years of repayments, in Atempo Growth’s deals (MF, February 2026)
Covenants	Promises in the contract: revenue or growth targets, no new debt, no sale of IP	Few financial ratios, but recurring revenue and growth covenants are common (Blakes)
Security	What the lender can enforce on if you default	Chiefly intellectual property, usually as senior secured debt (Blakes)

Two lines deserve a second look. The warrants look tiny on paper. They still sit in your fully diluted share count, where the next investors will find them. Then there’s amortisation (paying back the principal month by month), which kicks in on the day the interest-only period runs out. That date matters more than the rate does. The example shows why.

The EIB uses a different template. You usually repay its venture debt in a single payment at the end, a bullet repayment, and part of what the EIB earns depends on how the company’s equity does. Alessandro Izzo, an EIB executive, put it to MF in May 2026 in three parts: long maturities, interest paid later, and a return that partly comes from warrants or options.

How much does venture debt cost? A worked example

Let’s put numbers on it. The company is invented, and the terms sit inside the ranges above.

Say a software startup in Turin has just closed a €5 million Series A at a €20 million pre-money valuation, the company’s value before the new money comes in. It burns €250,000 a month and wants more cushion before its Series B. It has two routes:

• Option A: raise €6.5 million of equity instead of €5 million, at the same price.
• Option B: keep the €5 million round and add €1.5 million of venture debt, 30% of the round. Assume 12% interest, 12 months interest-only and then 24 monthly repayments of €62,500, a 1% arrangement fee, and warrants worth 10% of the loan at the Series A share price.

	A: bigger equity round	B: Series A plus venture debt
Cash raised	€6.5M of equity	€5M of equity + €1.5M loan
Existing shareholders keep	75.5%	79.5% (after warrants)
Cash cost over three years	None	About €382,500 (€367,500 interest + €15,000 fee)
Cash out in month 13	€250,000	€327,500 (burn + €77,500 to the lender)
Cash left at month 18	€2.0M	About €1.35M
Months of cash, no new money	26	About 22

Start with ownership. Dilution is the share existing owners give up when new shares are issued, and option B leaves them about four points better off: 79.5% against 75.5%, warrants included. Sell the company for €100 million one day and those four points are worth about €4 million, roughly ten times the loan’s cash cost. If it stalls, the extra equity cost nothing in cash. The loan still has to be repaid.

Now runway, where the maths turns less friendly. The €5 million alone lasts 20 months. A €1.5 million loan should buy six more; here it buys about two, because repayments begin in month 13 and eat the extra cash. With 24 months interest-only instead, the same loan gets you to about month 24. Comparing offers? Look up the date of the first repayment first, and only then haggle over half a point of interest.

Who lends venture debt in Italy and Europe?

The European Investment Bank comes first. In October 2024 it lent BeDimensional €20 million of venture debt, with InvestEU support. In December 2025 it signed €70 million of ‘scale-up debt’, its loan for companies in the pre-IPO growth phase, with Scalapay: a first for an Italian unicorn. Tensive followed in 2026. And MotorK, which builds software for car dealers and manufacturers, had borrowed €30 million from the EIB as far back as 2018.

Two rules make the EIB a scale-up lender. It typically lends €10 million to €50 million, and it wants you to invest at least twice the loan in R&D, sales and marketing in the EU. Tensive’s project page shows the pattern: €20 million from the EIB against a €44 million total cost.

Then the funds. In early 2026 CDP Venture Capital committed €15 million to the second fund of Atempo Growth, a pan-European lender with an office in Milan, calling it ‘the first venture debt fund in our portfolio’. Atempo structures deals from €2 to 3 million up to €50 to 60 million with institutional partners, and in Italy it has already lent to MotorK.

Younger companies need a different door: a bank loan backed by the state’s Fondo di Garanzia per le PMI. For innovative startups the guarantee is free, Mediocredito Centrale runs no further credit check, and it covers up to 80% of the loan, with a €5 million ceiling. By June 2025 it had backed 17,400 loans to 7,875 innovative startups, €3.1 billion in all. The average? About €179,000, over 59 months. It’s an ordinary bank loan, not venture debt, and our guide explains how Italy’s SME guarantee fund works.

The European market got smaller in 2025. Growth Capital counted 629 venture debt deals worth €19.9 billion, down from 841 deals and €27.7 billion the year before. Among the long-standing lenders is Kreos Capital, which BlackRock bought in 2023; by then Kreos had committed €5.2 billion in more than 750 transactions across 19 countries.

What are the risks of venture debt?

The first is the calendar, as the example showed. Repayments start on a date written in the contract, not on the day growth turns up. If revenue lands 30% under plan in year two, the €77,500 a month doesn’t shrink with it.

The second is covenants, the promises in the loan agreement. Carta warns that missing a target ‘could carry serious consequences, from increased interest rates to restricted access to additional credit’, and sometimes default. Then there’s the material adverse change clause: Blakes lists among typical events of default ‘a material adverse change to the business or investor support’. Who decides what counts as adverse? Ask before you sign.

Third, the lender stands at the front of the queue. Should the company fail or be sold, lenders get their money back before any shareholder, preferred or common. Their security is usually a claim on your intellectual property. Last, venture debt quietly assumes another round is coming. Before you count on one, see what Italian venture capital did in the third quarter of 2026.

What do venture lenders read first?

Your financial model, and in it, the cash line. First Citizens says most lenders expect at least 12 months of runway without the loan and a clear plan for using the debt to reach significant milestones; it also wants ‘backing from reputable venture capital firms’. The EIB asks for ‘a sustainable business model and business plan’. One spreadsheet answers most of that.

A lender reads it with different eyes, though. An equity investor asks how big the company could get. A lender asks whether you can still pay months 13 to 36 in a bad year. So add a downside case with revenue six months behind plan, and show the debt service month by month next to every covenant test. Our guide to a startup financial model you can defend covers the structure. If you’d rather build it with someone across the table, that’s what our financial model service is for.

Checklist: before you talk to a venture lender

1. Close the equity round first, or get close: the loan is sized on it.
2. Check your runway without the loan. First Citizens expects at least 12 months.
3. What does the loan buy? Pick one milestone and put a month next to it.
4. In the model, give the debt its own rows, month by month. Interest-only ends here, the first repayment lands there, and the fees and warrants go in too. Then rerun it as a downside case.
5. Get every term in writing, the covenants and the adverse change clause included.
6. Add the warrants to your fully diluted cap table.
7. Still at seed? Ask your bank about a loan backed by the Fondo di Garanzia first.

This article is general information, not legal, tax or investment advice. Loan terms vary by lender and change with the market: have a lawyer read the full agreement before you sign.