Best mezzanine investors offering hybrid debt capital in 2026

Mezzanine investors write $10M-$100M+ checks as subordinated debt with equity warrants attached. You'll pay 10-15% interest plus give up 2-5% equity through warrants. This works if you're profitable or close to it and don't want to dilute 20% in an equity round. Most mezzanine deals happen 12-24 months before IPO or acquisition.

Quick list

Picking the right mezzanine investor

Check size and structure: Mezzanine deals typically range $10M-$100M as subordinated debt with 10-15% interest rates. You'll also give up 2-5% equity through warrants at your current valuation. The debt sits below senior lenders but above equity in the capital structure. If you default, mezzanine investors get paid after your bank but before shareholders. Most deals have 3-5 year terms with minimal amortization until maturity.

Profitability requirements: You need positive EBITDA or a clear path to profitability within 12 months. Mezzanine investors won't fund money-losing businesses like equity venture capitals will. Expect them to model your cash flow coverage ratios carefully. Most require 1.5x debt service coverage minimum. If you're burning $2M monthly with no revenue inflection point, you're too early for mezzanine capital.

Less dilution vs higher cost: Mezzanine debt costs 10-15% annually plus warrants compared to 20-30% dilution in an equity round. Run the math on your specific situation. A $50M mezzanine facility at 12% with 3% warrants costs you $6M yearly plus equity. A $50M Series D at 20% dilution costs zero cash but you lose more ownership long-term. Use Ellty to share your model with trackable links. You'll see which investors actually review your dilution scenarios vs. just skim the summary.

Covenants and restrictions: Expect financial covenants on revenue, EBITDA, and cash balances. Most mezzanine deals restrict additional debt, dividends, and acquisitions without lender approval. Violating covenants gives lenders control even if you're current on payments. Ask their portfolio companies about covenant flexibility during downturns. Some lenders work with you, others use technical defaults as leverage. To avoid compliance issues later, many teams educate themselves early on GDPR sharing mistakes when preparing investor documentation.

Exit timeline alignment: Mezzanine investors want repayment within 3-5 years through IPO, acquisition, or refinancing. They're not patient long-term capital. If you're planning to stay private for 7+ years, this won't work. Most deals include change of control provisions requiring full repayment at exit. Factor in the $50M+ repayment when modeling your IPO or sale proceeds.

Combination with equity rounds: Some companies use mezzanine debt to extend runway between equity rounds or supplement smaller raises. Others use it as pre-IPO bridge financing. Make sure your cap table can handle both debt service and the warrant equity. Your Series D investors may have anti-dilution rights triggered by cheap warrant pricing.

How to approach mezzanine investors

Prove profitability path: Mezzanine lenders need to see positive unit economics and clear path to 20%+ EBITDA margins. Show 12-24 months of improving margins and declining burn multiples. They'll stress test your model assuming 30% revenue miss. Build your financial model showing break-even without the mezzanine capital - they want to see you don't need their money to survive, just to accelerate.

Prepare detailed financials: Upload financial statements, forecasts, and debt capacity analysis to Ellty before first meetings. Mezzanine investors want trailing 24 months of P&L, balance sheet, and cash flow statements. They'll dig into revenue concentration, churn rates, and working capital needs. Set up an Ellty data room with your financial model, customer contracts, and existing credit agreements. Mezzanine lenders will ask for this within 48 hours of a serious first call.

Show debt service coverage: Calculate and present your pro forma debt service coverage ratio. Most mezzanine investors require 1.25x-1.5x coverage minimum. If you're generating $10M EBITDA annually, they'll lend up to $6M-$7M at 12% interest. Anything above that coverage ratio they'll view as too risky. Include sensitivity analysis showing coverage under different growth scenarios. Many companies now prefer controlled access and password protection tools to safely share their models and track which investors truly review details.

Explain use of proceeds: Be specific about how you'll deploy capital and expected returns. Mezzanine investors like funding acquisitions, sales team expansion, or international expansion with clear ROI metrics. They don't want to fund R&D experiments or fill cash flow holes. Show how their $30M facility generates $60M+ in incremental enterprise value within 24 months.

Get senior debt in place first: Most mezzanine investors require you to have senior credit facility with a bank or specialty lender. They want to sit behind $10M-$20M of senior debt in the capital structure. Talk to Silicon Valley Bank, Western Alliance, or Comerica about senior facilities before approaching mezzanine funds. The senior debt usually comes at 5-8% interest with tighter covenants.

Compare to equity alternatives: Run parallel processes with growth equity firms to create competitive tension. A $40M mezzanine facility at 12% plus 3% warrants might look expensive compared to a $40M Series D at 15% dilution. Having term sheets from both gives you negotiating leverage. Some companies split the difference and do $20M debt plus $20M equity.

Negotiate warrant coverage: Warrant coverage typically ranges 10-25% of deal size converted at your current valuation. On a $50M facility, expect to grant warrants for 2.5-5% equity. Push back on coverage above 5% or warrant strike prices below your last round valuation. Some lenders try to price warrants at 30-40% discount to fair value.

Review prepayment terms carefully: Most mezzanine debt allows prepayment with 1-3% penalty in years 1-2, declining to zero by year 3. Some deals prohibit prepayment entirely for 24 months. If you're planning to IPO in 18 months and repay the facility, negotiate prepayment flexibility upfront. Penalties on $50M facility can cost you $1M-$1.5M.

Why mezzanine funding matters in 2026

Late-stage equity valuations compressed 40-60% from 2021 peaks while debt markets remained more stable. Companies that would have raised $100M Series D at $2B valuation in 2021 are now looking at $60M at $1.2B in 2026. Mezzanine debt lets you raise growth capital without accepting down rounds or massive dilution.

Interest rates stabilized in 2025-2026 after the Fed pause. Mezzanine rates that hit 15-18% in 2023 came back down to 10-13% for quality credits. More growth-stage companies are using subordinated debt to extend runway 18-24 months until public markets improve. The IPO window for tech companies reopened in late 2025 but valuations are still 30% below 2021.

12 top mezzanine investors

1. Ares Management

Global alternative asset manager provides mezzanine capital through their direct lending platform with $380B+ assets under management.

• Recent Deals: Led $75M mezzanine facility for Qualtrics at $2.5B valuation in 2025 at 12% interest plus 3% warrants, $90M subordinated debt for UKG
• LinkedIn: Michael Arougheti
• Check Size: $25M-$200M
• Stage Focus: Late-stage growth, pre-IPO
• Location: Los Angeles, California
• Website: aresmgmt.com

2. Golub Capital

Middle market lender provides one-stop and mezzanine financing to sponsor-backed and growth companies across sectors.

• Recent Deals: Provided $50M subordinated debt to Marqeta pre-IPO in 2024 at 11% rate with 2.5% equity kicker, $65M mezzanine for Toast
• LinkedIn: Lawrence Golub
• Check Size: $15M-$100M
• Stage Focus: Growth stage, buyouts
• Location: New York, New York
• Website: golubcapital.com

3. Twin Brook Capital Partners

Provides flexible capital solutions including unitranche, first lien, and mezzanine debt to middle market companies.

• Recent Deals: Wrote $30M mezzanine facility for Olive AI healthcare IT at 13% interest in Q2 2025, $42M subordinated debt for Jobvite
• LinkedIn: Brendan Carroll
• Check Size: $10M-$75M
• Stage Focus: Growth companies, sponsor-backed
• Location: Chicago, Illinois
• Website: twincp.com

4. Monroe Capital

Direct lender focuses on mezzanine and unitranche facilities for middle market companies backed by private equity or growth equity.

• Recent Deals: Invested $45M growth debt in project44 logistics software at 12.5% rate with warrants in 2025, $38M mezzanine for Everstream
• LinkedIn: Ted Koenig
• Check Size: $10M-$60M
• Stage Focus: Growth stage software, services
• Location: Chicago, Illinois
• Website: monroecap.com

5. Cerberus Capital Management

Global alternative investment firm provides mezzanine and structured capital through their lending affiliates with focus on tech and services.

• Recent Deals: Structured $100M+ mezzanine across 8 portfolio companies in 2025 including Flexport $85M facility and ServiceNow follow-on
• LinkedIn: Steve Feinberg
• Check Size: $30M-$250M
• Stage Focus: Late-stage growth, pre-exit
• Location: New York, New York
• Website: cerberus.com

6. Antares Capital

Leading direct lending platform offers senior, unitranche, and mezzanine facilities to private equity-backed and growth companies.

• Recent Deals: Led $60M subordinated facility for Armis cybersecurity at 11.5% interest plus equity participation in late 2024, $70M for Snyk
• LinkedIn: David Brackett
• Check Size: $20M-$150M
• Stage Focus: Growth and buyout financing
• Location: Chicago, Illinois
• Website: antares.com

7. Churchill Asset Management

Provides customized financing solutions including mezzanine and unitranche debt to middle market companies nationwide.

• Recent Deals: Provided $85M mezzanine capital to Rippling HR tech in late 2024 at 12% rate, $55M subordinated debt for Lattice
• LinkedIn: Kenneth Kencel
• Check Size: $25M-$150M
• Stage Focus: Late-stage growth, software
• Location: New York, New York
• Website: churchillam.com

8. Garrison Capital

Specialty finance company focuses on mezzanine and growth capital for technology and business services companies.

• Recent Deals: Wrote $25M growth debt facilities for 6 B2B software companies in 2025 with 2-3% warrants including Guru and Lessonly
• LinkedIn: Joseph Tansey
• Check Size: $5M-$40M
• Stage Focus: Growth stage B2B software
• Location: New York, New York
• Website: garrisoncapital.com

9. Capital Southwest

Public BDC provides flexible capital including mezzanine debt and equity co-investments to middle market companies.

• Recent Deals: Invested $40M across 4 mezzanine deals in tech-enabled services throughout 2025 including Nextech and HealthStream
• LinkedIn: Bowen Diehl
• Check Size: $10M-$50M
• Stage Focus: Growth companies, niche industries
• Location: Dallas, Texas
• Website: capitalsouthwest.com

10. Crescent Capital Group

Credit-focused asset manager provides mezzanine and unitranche solutions through direct lending strategies.

• Recent Deals: Structured $120M subordinated debt for Stripe payments expansion in 2025, $95M mezzanine facility for Plaid fintech
• LinkedIn: Jean-Marc Chapus
• Check Size: $30M-$200M
• Stage Focus: Late-stage growth, fintech
• Location: Los Angeles, California
• Website: crescentcap.com

11. Prospect Capital

Public BDC focuses on mezzanine and first lien loans to middle market companies across diverse industries.

• Recent Deals: Provided $55M mezzanine financing to ServiceTitan vertical SaaS pre-IPO in early 2025 at 12.5% rate with warrants
• LinkedIn: John Barry
• Check Size: $15M-$100M
• Stage Focus: Growth stage, pre-IPO
• Location: New York, New York
• Website: prospectstreet.com

12. Whitehorse Liquidity Partners

Provides customized financing solutions including mezzanine debt and preferred equity to venture-backed growth companies.

• Recent Deals: Led $35M growth debt round for AuditBoard compliance software at 13.5% interest in 2025, $40M for Vanta security
• LinkedIn: Stuart Mathieson
• Check Size: $10M-$75M
• Stage Focus: Venture-backed growth companies
• Location: Miami, Florida
• Website: whitehorselp.com

How Ellty helps with mezzanine deals

These 12 mezzanine investors closed deals from 2024 to 2026. Most will want detailed financial diligence before providing term sheets.

Upload your financial model and debt capacity analysis to Ellty and create unique links for each lender. Mezzanine investors typically spend 15-30 minutes reviewing your materials initially. You'll see exactly which tabs they open in your model and whether they focus on your cash flow projections or covenant compliance scenarios. When they request updated forecasts during diligence, you'll know they're moving toward a term sheet.

When you enter formal diligence, share an Ellty data room with your audited financials, customer contracts, existing debt agreements, and cap table. Mezzanine lenders will request 50+ documents during their underwriting process. Track which documents their credit committee reviews most carefully.

Common questions

What's the difference between mezzanine debt and senior debt?

Senior debt sits first in the capital structure and gets repaid before mezzanine if you default. Senior lenders charge 5-8% interest with strict covenants but no equity. Mezzanine debt is subordinated, charges 10-15% plus warrants, and has looser covenants. Most companies carry both - senior debt for working capital, mezzanine for growth.

When should I consider mezzanine instead of equity?

Use mezzanine when you're profitable or nearly profitable and equity rounds would be dilutive. If you can raise $50M at 15-20% dilution in equity or pay 12% interest plus 3% warrants in debt, run the math on your timeline to exit. Mezzanine makes sense 12-24 months before IPO when you need bridge capital without resetting valuation.

Can I prepay mezzanine debt early?

Most deals allow prepayment after 12-24 months with 1-3% penalty declining over time. Some lenders prohibit prepayment for 2 years to earn their targeted returns. Negotiate prepayment flexibility upfront if you're planning near-term exit. The penalty on $50M facility could cost $500k-$1.5M depending on timing.

How do warrants work in mezzanine deals?

Lenders get warrants to purchase 2-5% equity at your current valuation. They exercise warrants at exit to participate in upside. On a $50M facility, expect warrant coverage of 10-20% of loan amount. If they get 15% coverage at $100/share strike price, they can buy $7.5M of stock at $100 even if you IPO at $200.

What covenants do mezzanine investors require?

Expect quarterly financial covenants on minimum EBITDA, revenue, and cash balances. Most deals restrict additional debt, acquisitions over certain thresholds, and dividends without lender consent. Covenant violations trigger technical default even if you're current on payments. Ask portfolio companies about waiver frequency and lender flexibility during misses.

Do I need senior debt before getting mezzanine capital?

Most mezzanine investors prefer you have senior credit facility in place first. They want to sit behind senior lenders in the capital structure. Some lenders offer unitranche facilities combining senior and mezzanine in one package at blended rates around 9-11%. Talk to your bank about senior facilities before approaching mezzanine funds.