Sage’s $100 Million Raise Exposes Venture Debt’s New Power

Sage crossed $100 million in 2026 funding this month, pairing a $65 million equity round with a $35 million debt facility from Stifel Bank. The senior living and skilled nursing technology company did not take the debt route because equity had dried up. It took it because its hardware subscription model made it exactly the kind of borrower lenders want right now.

That pairing is becoming the default shape of growth capital in 2026. Equity has concentrated so heavily in artificial intelligence that companies building anything else, hospital hardware included, are leaning harder on debt to keep growing without selling off the company piece by piece.

Sage Blends Debt and Equity to Cross $100 Million

Sage builds hardware and software for senior care facilities. Its core offering runs on a Hardware as a Service model (HaaS, where customers pay over time for devices and the services attached to them instead of buying equipment outright). That subscription structure is exactly why a bank was willing to write the check.

The $35 million facility from Stifel Bank lets Sage buy and deploy more devices without selling more of the company to finance inventory. It sits on top of a $65 million Series C round led by Goldman Sachs Alternatives, the alternative investment arm of the Wall Street bank, rounding out Sage’s $100 million year.

Predictable, recurring device payments are the kind of cash flow a lender can actually model. Stifel gets a claim on revenue it understands. Sage gets growth capital without resetting its cap table months after closing a priced round.

Why AI Is Soaking Up the Equity Market

Sage’s blended stack is not happening in a vacuum. US venture investment reached $321.6 billion across more than 17,000 deals in 2025, and artificial intelligence alone accounted for 63.5% of that deal value, according to the 2025-2026 Venture Debt Review from Runway Growth Capital and PitchBook.

Outside that AI boom, the same report found equity investors and lenders leaning harder on revenue quality, capital efficiency and a visible path to profitability before writing a check. That is the environment Sage raised into. It is also the environment squeezing capital-intensive, non-AI businesses everywhere, from senior care hardware to clean energy infrastructure.

Not every capital-intensive bet outside AI is going hungry. 2150’s newly closed €210 million fund for urban climate solutions shows dedicated pools of capital still forming around sectors that need hardware and infrastructure spend rather than software margins. Energy and sustainability businesses logged 29 venture debt financings in 2024 and 33 in 2023, a smaller but steadier flow than the AI headlines suggest.

Venture Debt Just Notched a $68.8 Billion Record

US venture debt hit a record $68.8 billion in 2025, even as annual deal count held roughly flat around 1,000 transactions, per the same Venture Debt Review data set from Runway Growth Capital. Fewer borrowers are getting bigger checks.

Globally, the picture is smaller but points the same direction. The worldwide venture debt market is projected to reach roughly $48.9 billion in capital raised during 2025, with the United States generating the largest single share, according to Statista’s market outlook.

Debt-backed companies are not sitting on the sidelines at exit either. They accounted for 37% of total US exit value and 18% of exit count in 2025, both increases from the prior year, suggesting lenders are underwriting companies that do eventually get sold or go public.

What Lenders Actually Underwrite

Venture debt is not handed out on vibes. Lenders look for a specific set of signals before they price a facility, and Sage’s device subscription revenue happened to check most of them.

• Recurring, contracted revenue – the kind of predictable cash flow a lender can model, like Sage’s device subscription payments.
• At least 12 months of runway – insolvency risk inside that window is the fastest way to get turned down.
• A credible venture backer already on the cap table – early-stage loans often lean on investor reputation as much as revenue.
• Collateral – receivables, equipment or intellectual property a lender can claim if payments stop.
• A visible path to the next raise or to profitability – lenders want a clear answer for how the loan actually gets repaid.

Institutional money is chasing this same logic well beyond single lenders. Family offices have been shifting allocation from retail-style holdings toward private credit and tech, treating structured debt as a way to get startup-adjacent returns without taking equity-style risk.

Is Venture Debt Riskier Than It Looks?

Venture debt carries interest, covenants and a repayment schedule that does not pause for a bad quarter, and a single broken covenant can let a lender call the loan early. Research and industry voices largely agree the model rewards predictable revenue and punishes any startup using it to paper over weak fundamentals.

When you have very stable predictable revenues, that’s really the time when you can bank on venture debt.

Sophie Bakalar, a partner at Collaborative Fund and a former startup founder, said that during a financing panel reported by TechCrunch. She also called venture debt one of the two things that quietly blow up a company, alongside founder conflicts, when it is used without that revenue cushion.

There is a bigger structural pattern underneath the individual risk. A study from Edinburgh Business School at Heriot-Watt University, covering 59 countries between 2015 and 2024, found that every unit of venture debt introduced into a country’s startup ecosystem lines up with early-stage equity investment falling by roughly twice that amount, while late-stage equity funding rises by about four times as much.

Dr. David Dekker, the research fellow who led the Heriot-Watt study, compared the effect to a bridge across a ravine, describing how debt “can then help it cross the difficult gap to the next, higher stage.” In plain terms, debt is not spreading capital evenly. It is reshuffling who gets funded early and who gets funded big.

Europe’s Slower, Selective Climb

Venture debt made up 29% of total European venture capital deal value in 2025, down from a 2024 peak of 47%, according to a European venture debt market update from Houlihan Lokey. The bank reads the pullback as normalization after an unusually debt-heavy year rather than a retreat from the tool itself.

Blue Owl and J.P. Morgan were among the lenders active in Europe’s largest 2025 deals, the bank’s data shows, alongside a widening group that includes BNP Paribas, ING and Rabobank.

Germany’s domestic venture market stayed roughly flat in the first quarter of 2026, with local startups raising about €1.7 billion (roughly $1.8 billion), but venture debt financings there climbed to 20 deals, more than the 2025 quarterly average, according to the country’s KfW VC Dashboard. Generation Tech Partners’ €50 million roll-up bet on German software firms shows one version of where that capital is now heading: consolidation financed by debt and structured equity together, not a single splashy round.

Sage’s $100 million year is small next to the industry’s $68.8 billion one, but it runs on the same math investors on both sides of the Atlantic are now betting on: certainty about repayment is starting to matter more than the size of the check.

Frequently Asked Questions

What is venture debt, exactly?

Venture debt is a loan made to a company that already has venture capital backing, repaid with interest and sometimes warrants rather than by giving up ownership. It typically funds somewhere between 10% and 30% of a startup’s last equity round, and it is meant to follow a VC round, not replace one.

How much does venture debt typically cost?

Base interest rates generally run 8% to 15% a year, often quoted as a lending benchmark rate plus 6 to 9 percentage points. Once fees and warrants are added in, the total cost of borrowing can climb to 20% or 25% annually for riskier, earlier-stage borrowers.

Does venture debt dilute founders at all?

The loan itself does not dilute ownership, but the warrants lenders usually attach to the deal do. Those warrants typically add somewhere between 1% and 5% additional dilution, priced against the company’s most recent equity valuation.

What happens if a startup cannot repay its venture debt?

Missing a covenant, not just a payment, can trigger a technical default even if the company is current on interest. That gives the lender the right to demand immediate repayment or move against pledged collateral, which is why lenders rarely lend against hope alone.

Is venture debt limited to tech startups?

No. Healthcare devices and supplies have been one of the most active categories for venture debt for several years running, alongside energy, cleantech and asset-heavy hardware businesses like Sage, wherever recurring cash flow gives a lender something concrete to underwrite.