Persado CEO Alex Vratskides could raise venture funding. He’s just not sure he wants to.

His New York startup doubled annual revenue this year and is on track to break even in 2017. Valued at about $200 million in April, the marketing automation company counts Bain Capital and Goldman Sachs among its backers—a source of validation in the eyes of many venture investors.

But Vratskides thinks there’s a better way to reach the finish line: take on debt. “Interest rates are low, and you avoid dilution. It’s a no-brainer,” said Vratskides, who is angling to secure a loan of $30 million or so in the second half of 2017. “It is potentially our first preference.”

Last year, venture capitalists plowed a record $79 billion into startups at often unsustainable valuations. Enthusiasm waned in 2016, when fewer startups got funded, and those that did faced more scrutiny and tougher deal terms.

Venture deals in 2016 — for all but the hottest startups, anyway — required founders to give up more equity in exchange for less money than they did last year. So despite cautionary tales from tech blog GigaOm and game console maker Ouya, which both flamed out after failing to pay back lenders, startups have loaded up on debt, enabling them to borrow money without ceding a potentially lucrative stake.

No one publishes national data on venture debt, but a half dozen lenders provided numbers showing that activity was up in 2016. Silicon Valley Bank’s loans to venture-backed startups rose 19 percent during the past year, hitting $1.1 billion for the quarter that ended Sept 30. At Hercules Capital, annual volume is up and the average deal size increased 16 percent from last year to $15.6 million. TriplePoint’s volume is up more than 25 percent.

Borrowing capital allows startups to postpone valuation negotiations that come with raising equity. Startups fear the prospect of selling shares at a lower price, known in the industry as a down round. “Folks don’t want to do down rounds or flat rounds,” said Haim Zaltzman, a partner at law firm Latham & Watkins, which has handled well over 100 such loan transactions this year. “Debt allows you to get around that.”

Zaltzman compares this year’s activity with the debt boom in 2008, when venture funding slowed to a trickle. Silicon Valley Bank, the granddaddy of tech lending, says loan volume and value could have gone even higher. “What constrained us was discipline,” said Marc Cadieux, the bank’s chief credit officer who has seen competitors offer startups double what his bank would, at “materially cheaper” rates. “There are limits to what we’re willing to do.”

Taking on debt can be risky. Unlike venture investors, who typically hope that one investment will hit big and compensate for duds, lenders get no upside if a startup succeeds. They require timely payments from all their companies, with interest that’s designed to provide the lender with a more predictable and less risky source of revenue than venture investing. When startups miss payments, as GigaOm and Ouya can attest, and gaming company Mind Candy is finding out, lenders can be unforgiving.

“When things go bad, they go very bad, but there’s usually little information,” said Mike Driscoll, founder and CEO of Metamarkets, an advertising technology startup founded in 2010 that has raised around $40 million. “Silicon Valley buries its dead very quietly.”

Despite the risk, Driscoll decided to take a loan this year. He says he didn’t consider tapping VCs again because another round would have diluted his shares too much. Driscoll says he ran a formal process, getting term sheets from five lenders along with lots of advice from Khosla Ventures and his other investors. The offers had interest rates ranging from 9 to 15 percent over two to five years, and the terms protecting the lenders varied. Financial covenants, especially ones permitting the lender to take control of the startup, were sometimes stringent.

One lender had a clause that would force Metamarkets to pay off the debt early if it failed to hit 80 percent of its revenue projection. Driscoll passed on that, opting for cleaner terms for a $14.25 million loan in October at an average rate of around 11 percent from Wellington Financial and City National Bank.

Matt Murphy, a partner at Menlo Ventures, says most companies he works with have some amount of debt. As long as the terms are structured properly, it can be a good way to minimize dilution and build to the next funding round, he says.

Lizette Chapman is a Bloomberg writer. Email: lchapman19@bloomberg.net