---
title: "What Is Business Development Company (BDC)?"
term: "Business Development Company (BDC)"
description: "A Business Development Company (BDC) is a publicly traded or registered investment company that provides capital to small and mid-sized businesses, often in private credit, mezzanine, or equity co-investments — regulated under U.S. law."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/business-development-company-bdc
---

# What Is Business Development Company (BDC)?

> A Business Development Company (BDC) is a publicly traded or registered investment company that provides capital to small and mid-sized businesses, often in private credit, mezzanine, or equity co-investments — regulated under U.S. law.

**A Business Development Company (BDC)** is a regulated investment company that deploys capital into private and small public businesses — frequently through loans, mezzanine structures, or equity co-investments.

### How it works

Created under U.S. legislation in 1980, BDCs must invest at least 70% of assets in qualifying private or thinly traded companies. Many BDCs focus on **middle-market lending**: senior secured loans, unitranche facilities, and second-lien debt to companies too small for large syndicated markets but too mature for classic venture equity.

Some BDCs are **publicly traded**, giving shareholders daily liquidity on an exchange — unlike closed-end private funds with multi-year lockups. BDC managers earn fees similar to other asset managers; yields come from interest income, origination fees, and occasional equity upside.

Startups rarely meet BDC credit boxes at seed stage. BDC capital more often appears at growth or PE-backed companies needing **venture debt alternatives**, recapitalizations, or add-on financing.

### Why it matters

- **Founders:** If you are scaling with revenue and seeking non-dilutive capital, a BDC-backed lender may sit alongside traditional venture debt providers — compare covenants, warrants, and maturity structures.
- **Investors:** BDCs bridge retail access to private credit. Due diligence should cover portfolio quality, fee load, leverage at the BDC level, and mark-to-market practices.

### Common mistake

Assuming all BDC capital is "cheap debt." Pricing and covenants vary widely; public BDC shareholders also care about dividend coverage, which can push lenders toward conservative structures.

### Related ideas

Venture debt, private credit, middle market, [bullet maturity](/glossary/bullet-maturity), and [buyout](/glossary/buyout).

## FAQ

### What is a Business Development Company in simple terms?

A BDC is an investment firm structure — often listed on a stock exchange — that raises money from public shareholders and lends to or invests in private companies, similar to a mini private equity or credit fund with daily liquidity for investors.

### Why does BDC matter?

For growth companies, BDCs can be a source of venture debt or structured capital. For retail and institutional investors, they offer access to private credit returns without locking capital in a traditional fund for years.


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Source: https://venturecapitaltracker.com/glossary/business-development-company-bdc