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The most important thing for lenders? Repayment capacity. The reality is straightforward: debt is a numbers game. Lenders don't bet on vision or market opportunity. They want to know if the startup they’re lending money to is able to repay it. That’s purely numbers-driven.
Naturally, every startup wonders what metrics are actually "good" and what they need to deliver. We analyzed 4,000 startups on our platform to give you a sense of what such metrics look like:
- Average runway: 22.08 months
- Average revenue growth: 21.01%
- Average leverage (Debt-to-Equity): 1.62
The key takeaway: Consider debt early. Optionality doesn’t appear in a crisis.
What Lenders Screen For (And Why)
Before we delve into the numbers, it's helpful to understand the logic behind them. A lender needs to answer one question: "Can this company repay what it borrows, and will it still be operating when the repayment is due?" That question breaks down into three sub-questions:
- How much time does this company have? (Runway)
- Is the business growing in a way that supports future cash flow? (Revenue growth)
- How leveraged is it already, and can it handle more debt? (Leverage ratio)
These aren't the only metrics that matter. Other metrics (CAC, net revenue retention, or burn multiple) also play a role in underwriting decisions. However, runway, growth, and leverage are a good starting point for both lenders and startups.
The Data: Where These Numbers Come From
The benchmarks in this article come from startups on the re:cap platform. These are companies at various stages of growth, predominantly SaaS and tech businesses with recurring revenue models.
A few definitions to keep in mind:
- Runway: the number of months a company can continue operating at its current burn rate without additional funding. Calculated as cash balance divided by monthly net burn rate.
- Revenue growth: year-over-year revenue growth rate. We looked at YoY rather than month-over-month because it smooths out seasonality and gives a more stable signal.
- Leverage ratio (Debt/Equity): total debt divided by total equity. This is the standard debt-to-equity ratio. A higher number means the company is carrying more debt relative to its equity base.
One important caveat: these are averages from companies. They represent what companies considering debt look like, not necessarily what lenders approve. The relationship between these metrics and outcomes is directional, not causal.
Let’s dive into the numbers.
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Get a funding offerRunway: Show your planning capabilities
Average runway on our platform: 22.08 months
Nobody likes pressure. Lenders hate it even more.
If your runway is tight and you need debt to keep the lights on, every serious lender will pass. Not because you're a bad business, but because a company raising debt out of desperation is a company that can't afford to repay it. The math doesn't work, and lenders know it.
The runway is a selection effect: companies that approach debt from a position of strength get further in the process. Companies that approach from weakness get filtered out early. Thinking about your funding structure early helps here.
The practical rule of thumb: have at least six months of runway before you start the debt conversation. More is always better. If you're extending your runway specifically to improve your debt profile, that's a smart move. But do it before you're in crisis mode.
A useful mental model: debt can add runway on top of what you already have. It's a funding instrument to achieve a measurable goal with clear ROI. If your current runway is already dangerously short, debt won't save you.
Revenue Growth: Stability Beat Hype
Average YoY revenue growth on our platform: 21.01%
Here's the thing most founders get wrong about growth and debt: you don't need 100% year-over-year growth to get funded. Debt is not venture capital. Nobody is betting on a moonshot.
What lenders care about is consistency. A company growing at 21% with predictable, recurring revenue is more financeable than one growing at 90% with volatile, lumpy numbers. The first company can model its repayments. The second one can't.
This is where capital structure thinking comes in. Debt works best when your revenue engine is reliable. Recurring revenue (subscriptions, annual contracts, predictable renewal rates) is the foundation that makes lenders comfortable.
If your growth is spiky, focus on the underlying drivers. Pipeline coverage, pricing discipline, and customer retention matter more than the headline growth number. A lender will see through superficial growth instantly.
Leverage: Lenders Don’t Bet on Hope
Average leverage ratio on our platform: 1.62
A ratio of 1.62 means that for every euro of equity, the average company carries €1.62 in debt. That's a meaningful number: these companies have already demonstrated their ability to service debt.
The reason this metric matters so much comes back to the same question: can you repay? A high leverage ratio from a company with predictable revenue and low churn is a signal of confidence. A high leverage ratio from a company with volatile revenue and high churn is a red flag.
This is where recurring revenue becomes the key differentiator. Lenders size debt based on the reliability of your revenue stream and not its size alone. A €2M ARR business with 95% net revenue retention might get better terms than a €5M ARR business with 60% retention.
The underlying logic: predictable revenue means predictable repayment. That's what a lender needs to see.
Debt-Readiness for Startups: The Three Benchmarks at a Glance
Here's where the three metrics sit together. What the averages look like, what lenders want to see, and what each number actually signals about your business:
What to Do If You're Below the Benchmark
Being below the benchmark on one of these metrics doesn't mean the door is closed. It means you need a plan. Here's how to close the gap on each one:
Runway
If your runway is under six months, fix it before you even consider debt. Cut discretionary spend. Tighten payment terms with customers. A short runway and debt are a losing combination.
Revenue Growth
If your growth is inconsistent, focus on the root causes. Pipeline leaks, pricing misalignment, and churn are the usual suspects. You need to make it predictable. Lenders will accept 30% consistent growth over 90% erratic growth.
Leverage Ratio
If your leverage is already high and you want more debt, the most effective move is to strengthen the revenue side of the equation. Improve gross margins. Speed up collections. Reduce churn. A stronger revenue base makes your existing debt less risky and opens the door to more funding.
When Debt Actually Makes Sense
The data tells a clear story: debt works best when you don't need it desperately.
Debt makes sense when you've already raised equity and want to bridge a gap or extend your runway without further dilution. It makes sense when your revenue is predictable, and your growth is consistent. And it makes sense when you're thinking about capital efficiency, using the right instrument for the right job, rather than defaulting to equity for everything.
It doesn't make sense when your runway is dangerously short, your growth is unpredictable, or you're using debt to paper over structural problems in the business. Lenders will see this, and your terms will reflect it.
Q&A: Debt-readiness for startups
Do I need all three metrics to be strong before I apply for debt?
Not necessarily. The runway is the most critical. If it's dangerously low, most lenders will pass regardless of your other metrics. However, if your runway is solid and one of the other metrics is weaker, there's still room to have a conversation. Lenders look at the full picture, not just one number in isolation.
What counts as "enough" runway for debt?
The rule of thumb is at least six months. Twelve months is comfortable. More runway gives you more negotiating power and better terms. Lenders price risk, and a longer runway means less risk.
Does my growth rate need to be high?
No. Consistency matters more than speed. A 30% YoY growth rate with predictable, recurring revenue is more attractive to a debt lender than 90% growth with volatile, one-off revenue. Lenders need to model repayments, and they can only do that if your revenue is reliable.
What's the difference between venture debt and revenue-based financing?
Venture debt is typically a term loan with fixed repayments, often paired with warrants or covenants. Revenue-based financing ties repayments to a percentage of your monthly revenue, which makes it more flexible when revenue fluctuates. Both require strong underlying metrics, but the repayment structure is fundamentally different.
When should I start thinking about debt?
Early. The data is clear on this: optionality disappears in a crisis. If you wait until you urgently need capital, your metrics will already be under pressure, and your terms will show it. Start thinking about your capital stack before you need to act on it.
Looking for debt funding?
€5M, 60 months, non-dilutive, no warrants, no covenants, no equity kicker: we offer flexible debt funding for tech and SaaS companies.
Get a funding offer
