The Three Industries Banks Abandoned (And How They Survived Anyway)
By Taimour Zaman
A real estate developer I know was 60 days from losing a $47 million multifamily project in Dallas last year. Not because the project was bad—his pre-leasing numbers were strong, and the location was solid. But because his regional bank, spooked by 2023’s banking crisis, refused to refinance his construction loan when it matured.
Ten years ago, that would’ve been a disaster. The project would’ve been foreclosed. Investors would’ve lost everything. The developer’s reputation would’ve been destroyed.
Instead, he closed a $32 million debt facility with a private real estate debt fund in 28 days. Higher interest rate than his bank loan—12% instead of 7%—but the project survived and is now stabilized and cash-flowing.
That story is playing out thousands of times across three sectors: commercial real estate, technology, and healthcare. Traditional lenders retreated. Alternative capital stepped in. And the businesses that understood this shift survived while others didn’t.
Let me show you what’s actually happening in each sector—not theory, but the real mechanics of how companies are getting deals done in 2025.
Commercial Real Estate: When Your Bank Suddenly Becomes Useless
The 2023 banking crisis didn’t just kill three regional banks. It killed relationship lending for commercial real estate.
I’ve talked to developers who’d banked with the same institution for 20 years—flawless payment history, profitable projects, strong relationships. Didn’t matter. When regulators came down hard on real estate exposure after Silicon Valley Bank collapsed, those relationships became worthless overnight.
Here’s the scale of the problem: roughly $900 billion in U.S. commercial property loans are maturing through 2025. Under normal circumstances, 80% of those would simply refinance with their existing bank. Rates might adjust, but the loan would roll over.
Not anymore.
Banks are refinancing 40-50% of maturing loans, only for their absolute best clients with pristine properties in top-tier markets. Everyone else? You’re on your own.
But here’s what the media missed while writing doom-and-gloom commercial real estate headlines: developers found other money.
Non-bank lenders now hold over 60% of U.S. commercial mortgage debt. Debt funds, mortgage REITs, insurance companies, and private credit providers have filled the gap left by banks.
A typical deal structure in 2025 looks nothing like it did in 2019:
Old model (2019):
- 75% senior loan from regional bank at 5.5%
- 25% equity from the developer and maybe one institutional partner
New model (2025):
- 50% senior loan from regional bank at 7% (if you can get it)
- 25% mezzanine debt from a private fund at 12-13%
- 15% preferred equity from a debt fund at 15% preferred return
- 10% common equity from the developer and crowdfunding platform
That capital stack looks complex, but it’s how deals get done now. And here’s the surprising part—developers are often happier with this structure.
Why? Because the private lenders actually understand real estate. They can make decisions in weeks instead of months. They’ll finance value-add deals and repositioning projects that banks consider too risky. They structure covenants around actual project milestones instead of arbitrary financial ratios.
Real estate crowdfunding has been the other game-changer. Platforms like Fundrise, RealtyMogul, and CrowdStreet let accredited investors invest $25,000 to $100,000 in specific properties or funds. For developers, that’s equity capital without giving up control to institutional partners who want board seats and veto rights.
I know a developer in Phoenix who raised $4.2 million on a crowdfunding platform in 45 days for a mixed-use project. His pitch deck, financial projections, and project photos went live on the platform. Individual investors committed capital directly. No institutional committee votes. No 90-day diligence process.
The economics work because everyone’s getting what they need. Developers get equity capital. Individual investors can get direct real estate exposure with projected returns of 15-20%. And the projects that couldn’t happen with traditional financing alone get built.
Technology: When Venture Capital Suddenly Got Expensive
Let me tell you what changed for tech founders between 2021 and 2023: everything.
In 2021, if you were a SaaS company with $2 million in ARR growing 100% year-over-year, VCs were throwing money at you. You could raise $15 million at a $75 million valuation, maybe higher.
By 2023, that same company, with the same metrics, might be offered $8 million at a $40 million valuation if they got offers at all.
Founders faced an impossible choice: take a down round that would crater morale and trigger anti-dilution provisions, or figure out how to survive until market conditions improved.
The smart ones chose option three: stop relying exclusively on venture capital.
Venture debt hit $53.3 billion in deal volume in 2024—up 94% from the prior year. That’s not a typo. Venture debt nearly doubled in one year because founders needed a runway extension without equity dilution.
But here’s where it gets interesting. The most sophisticated founders I talk to aren’t just using venture debt. They’re building diversified capital strategies that would’ve been impossible to execute five years ago.
Real example: A SaaS company in the sales enablement space raised its Series A in early 2022—$12 million at a $60 million post-money valuation. By late 2023, they were growing nicely (75% YoY) but burning $800K/month. They’d have about 15 months of runway left by mid-2024.
Their options:
- Raise Series B at probably a flat or down valuation (terrible optics)
- Cut burn dramatically (kills growth momentum)
- Get creative with alternative financing
They chose option three and built this capital stack:
- $3 million venture debt from a specialty lender at 11% interest + 8% warrant coverage
- $1.5 million revenue-based financing against their recurring revenue, paying back 6% of monthly revenue until they hit a 1.4x multiple
- $500K equipment financing for their office build-out
- Kept their equity dry powder for a later round at a better valuation
The total cost of capital was higher than pure equity would’ve been on paper, but the math works very differently when you factor in valuation and dilution.
That $5 million in alternative financing cost them $1.2 million in interest and payments over 2 years. But it bought them 18 months to grow from $8M to $18M in ARR, which let them raise their Series B at a $120M valuation instead of the $50M they would’ve gotten in 2024.
The equity they preserved by not doing a bridge round is worth $8-10 million at that Series B valuation. They paid $1.2 million to preserve $8-10 million. That’s not financial engineering—that’s basic math.
Revenue-based financing has become standard operating procedure for SaaS companies. Firms like Lighter Capital, Capchase, and Pipe built entire businesses around advancing cash against recurring revenue. Instead of giving up 15-20% equity, founders pay back a percentage of monthly revenue until they’ve repaid 1.3-1.5x the advance.
The appeal is obvious: payments flex with revenue (slow month = smaller payment), no equity dilution, no board seats, and the relationship ends when you’ve paid back the agreed amount. You’re not managing investors forever.
Even large tech companies are using alternative structures more creatively. Convertible notes with increasingly founder-friendly terms. Structured equity with downside protection that makes investors happy without giving them control. Pre-IPO secondary sales that give early employees liquidity without triggering a formal fundraising round.
The pattern is clear: founders realized they don’t need to rely on venture capital for every dollar. They’re matching capital sources to specific needs. Equity for long-term strategic growth. Debt for runway extension. Revenue-share for marketing spend that generates immediate ROI.
Healthcare and Life Sciences: The Specialty Lenders Who Actually Understand Your Business
Healthcare and life sciences companies face a brutal capital challenge: they need tens or hundreds of millions for R&D and clinical trials, but they have zero revenue for years—sometimes a decade.
Banks won’t touch them. You can’t lend against hope and patent applications.
Venture capital will fund some of them, but only companies swinging for blockbuster outcomes. If you’re developing a solid specialty therapy that might do $200M/year in peak sales instead of $2 billion, most VCs pass.
So what happens to the biotech company with promising Phase 2 data but not-quite-blockbuster potential? Or the medical device manufacturer with proven technology but a three-year FDA approval timeline?
Five years ago, many of them just died. Not because the science was bad or the market didn’t exist. But because the capital didn’t exist in a form that they could access.
That’s changed radically.
Royalty financing has become a standard tool. Here’s how it works: A specialized lender provides upfront capital—say, $25 million—in exchange for a percentage of future product sales (typically 3-8% of net revenue). No equity dilution. No fixed payments while you’re pre-revenue. If your therapy fails in trials, you owe nothing. If it succeeds and generates $100M/year in sales, you pay the lender $5-8M annually until they’ve received their agreed-upon return (usually 2-3x their investment).
I know a biotech company that used this exact structure. They’d raised $40 million in Series A and B funding but needed another $20 million for Phase 3 trials. Raising a Series C during clinical trials—when outcomes are uncertain—would’ve meant accepting a terrible valuation and massive dilution.
Instead, they structured a royalty deal: $20 million upfront for 6% of net sales if the drug gets approved. If it fails, they owe nothing. If it succeeds, the lender participates in the upside, but the company avoids diluting existing shareholders by another 30-40% during a period of maximum uncertainty.
The drug got approved. It’s doing about $150M in annual sales. The company pays the lender roughly $9M/year, and after five years that obligation ends. Meanwhile, the equity holders kept ownership that would’ve been worth $200-300 million less if they’d raised another equity round at a depressed valuation.
IP-backed loans are another fascinating structure. Specialized lenders who understand how to value patent portfolios and clinical data will lend against these assets. A biotech company with promising Phase 2 results and a strong IP portfolio might secure $10-15 million in debt financing against those assets.
Try walking into a regional bank and asking for a loan secured by your Phase 2 trial data. They’ll look at you like you’re insane. But some funds do nothing but life sciences lending, which can underwrite that risk intelligently.
Healthcare-focused private credit funds have also exploded for the services side—hospitals, clinics, physician practice roll-ups, and healthcare IT companies. These funds understand Medicare and Medicaid reimbursement models, regulatory requirements, and the operational metrics that matter in healthcare.
A private equity firm acquiring a chain of urgent care clinics can get senior debt from a healthcare credit fund that understands patient volume metrics, payer mix, and reimbursement trends. That lender can say yes to deals a generalist bank would decline because it doesn’t have the sector expertise to underwrite the risk.
The result is a specialized capital ecosystem that didn’t exist a decade ago. Healthcare and life sciences companies now have financing options beyond “raise VC or die trying.”
What Actually Unites These Three Sectors
On the surface, real estate, tech, and healthcare seem completely different. But the same forces are driving alternative financing adoption in all three:
- Traditional lenders can’t or won’t serve them. Banks have regulatory constraints. VCs have return requirements that exclude 90% of good businesses. Private equity wants control most founders won’t surrender.
- Alternative lenders built specialized expertise. They hired people who actually understand construction lending cycles, SaaS unit economics, and FDA approval processes.
- The capital infrastructure matured. Ten years ago, most of these structures were theoretical or tiny. Today, there are dozens of well-capitalized funds in each sector with proven track records and institutional backing.
- Companies are optimized for capital efficiency. Founders and developers realized that the lowest-cost capital isn’t always the best. Flexibility, speed, and preservation of equity or control often matter more than interest rates.
The result is a more diverse, competitive, and functional capital ecosystem. Companies get funded that traditional channels would’ve rejected. Investors get exposure to attractive risk-adjusted returns. Capital flows more efficiently to productive uses.
How to Think About Alternative Financing for Your Sector
If you’re in commercial real estate, understand that relationship banking is largely dead. Your capital strategy should include debt funds for mezzanine financing, crowdfunding platforms for equity financing, and specialized lenders who understand your property type and market. The developers winning deals in 2025 have relationships with 4-5 non-bank capital sources they can tap quickly.
If you’re in technology, stop viewing alternative financing as a fallback plan. It’s a strategic tool for capital efficiency. Build relationships with revenue-based financing providers and venture debt lenders before you desperately need them. Founders who are optimizing their cap tables are diversifying capital sources and matching financing types to specific uses.
If you’re in healthcare and life sciences, know that specialized lenders exist who understand your sector’s unique timelines, risks, and economics. You have options beyond traditional VC and bank debt that can preserve equity during long development cycles. The companies that have navigated this successfully have built relationships with royalty financing providers and healthcare-focused credit funds.
The alternative lending landscape isn’t future speculation. Its current reality is reshaping how entire industries access capital.
The question is whether you’re adapting your strategy to reflect that reality or still operating with a 2019 playbook in a 2025 market.
Navigate Sector-Specific Financing With Deep Expertise
Understanding that alternative lending exists is the easy part. Knowing which structures work for your specific industry, which lenders have the appetite and expertise for your deal, and how to structure financing on optimal terms—that requires deep sector knowledge and established relationships.
At AltFunds Global, we’ve built networks of specialized lenders across commercial real estate, technology, healthcare, and other capital-intensive sectors. We understand the unique financing needs, challenges, and opportunities in each industry, and we can connect you with lenders who have both the capital and the expertise to support your growth.
Whether you’re a real estate developer structuring a complex capital stack with mezzanine debt and crowdfunding equity, a tech founder optimizing between venture debt and revenue-based financing to preserve ownership, or a healthcare company seeking royalty financing or IP-backed loans for R&D, we can help you navigate the landscape and access the right capital on the right terms.
👉 Want tailored guidance? Schedule your strategy call now.
The capital exists. The question is whether you know how to access it strategically.