Start-Ups Increasingly Add Debt to Stay Afloat (WSJ StartupJournal)

Though they remain largely out of the spotlight, venture-debt providers are growing fast, becoming some of Silicon Valley's biggest stakeholders. They loaned nearly $2 billion to U.S. venture-backed companies last year, up from $434 million in 2002, according to research firm VentureOne. In total, debt formed 7% of the money invested in U.S. venture-backed companies in 2006, up from 2% in 2002.

While venture debt isn't new, it is becoming more important because it is taking longer for start-ups to go public. In 1999, the median start-up took three years to go public from the time it first got financing. That wait has now doubled to more than six years, according to VentureOne. Many companies thus need more money to stay private longer, creating more opportunities for venture lenders.