Venture Lending’s 20% Return Is Next Frontier for Debt Investors

Lending to companies that are not yet profitable may be the next frontier for institutional investors chasing returns in the yield-starved credit markets.

Buyers like pension funds can score double-digit returns through venture capital lending vehicles like business development companies and private credit funds, according to venture debt investment manager Applied Real Intelligence.

“Within private debt, venture debt may have the highest risk-adjusted return of any strategy over the past 15 years,” ARI said in a report this week.

Within the $890 billion private debt market, which is known for compensating investors for a lack of liquidity, venture ...