Growth capital is a form of. Venture debt 101 – your top questions answered. Fast-growing young businesses with a limited trading history and little or no track record of profitability usually struggle to borrow money from conventional sources, even when their futures are bright. With proper preparation and a solid vetting process, your business will attract a venture capital partner that can help it grow to its next level. Insights provided by BOOST&Co's Ria Hopkinson We explain why this type of fast, flexible funding is ideal for businesses that struggle to gain funding from banks At BOOST&Co, we’ve specialised in providing venture debt to UK-based SMEs since 2011, but one of the questions we’re frequently asked is “what does ‘venture d Banks are generally wary of the risks posed by these start-ups and tend to steer clear (as seen in their initial reluctance to provide CBILS loans to SMEs). This final element is usually structured as a warrant, giving the lender the right to buy a small portion of equity at a fixed price during the term of the loan. Venture debt is an appealing alternative for scale-ups in need of growth capital because it provides more funding, faster and earlier in a company’s life cycle, and without the use of fixed criteria, ratio-testing or covenants. Venture debt financing may be a creative way to raise capital, but that doesn’t mean it’s right for every startup. Step-change growth is within your grasp. We assess how much we can lend once we understand these factors. – but more on that later. SMEs form 99.9% of the 5.9 million businesses in the UK, so it is vital that we encourage entrepreneurs to start businesses and to drive them to the point of scalability. We help you to scale your business and achieve higher valuations. Venture debt is a loan that provides working capital for early-stage and growth-stage companies without the dilutive effect of a full-fledged equity investment. BOOST&Co offers term loans, venture debt and invoice financing for innovative, fast-growing SMEs. Once secured, venture debt can be drawn down over time. It can be particularly difficult for relatively young businesses to manage these needs where they vary by season. Despite tough trading conditions and ongoing uncertainty around both Covid-19 and Brexit, entrepreneurs retain a healthy appetite for establishing start-ups, with a record number – almost 700,000, a 2.8% increase on the previous year – being founded in 2019. Thanks for subscribing to our newsletter. We then discuss these with you to tailor your venture debt. Learn more. After a lender has designed a loan specifically for your business, you can use it in a number of ways. boost cash reserves when they're either seeking a runway extension or want greater flexibility 2 Venture debt typically incorporates three elements: a fee of between 1% and 2% of the approved loan amount, an annual interest rate of between 10% and 12%, and an equity kicker worth 10% to 20% of the loan. Nevertheless, this sort of funding is open to young and relatively immature businesses, even though bank finance may not be an option, because venture debt providers are interested in the current and expected performance of a firm, rather than its historical financial performance. Simfoni is a next-generation digital solutions provider for procurement professionals, with regional offices in Chicago, London and Dubai. November 20, 2018 “The moment we got to know Espresso, we knew we were in good hands. But how do fast-growing companies fund ambitious growth strategies, at a time when banks’ support for SMEs is declining? The spend analytics and buying automation business specialises in driving operational improvement and cost reduction for its customers, which include a variety of blue-chip consultancy firms. This is not to suggest that venture debt is suitable for start-ups with no track record or no significant revenues or assets. Not all VCs do offer debt. ). Pocket Aces will use the funds to boost its content output and invest in new content formats and distribution channels, it added. BOOST&Co provided Pod with a £2.4m growth capital loan, which the firm is using to expand routes to market through partnerships with hardware manufacturers and to strengthen its marketing. . The products available from non-bank lenders such as BOOST&Co combine the traditional features of a loan with aspects of venture capital that have traditionally been the preserve of investors offering equity finance. First, what exactly are we talking about here? These can include the purchase of equipment or the cost of software licences. Xalient is an independent IT consulting and managed-services provider. Capital for smarter growth. Plans for servicing debt in a downside scenario. The London-based company is now making its expertise available to the private and commercial sector. It is included in the FCA register and its registration number is 711918. At BOOST&Co, we’ve specialised in providing venture debt to UK-based SMEs since 2011 – and amid the coronavirus pandemic, this type of fast, flexible funding is more important than ever. LBO - Leveraged Buyout - Using Debt to Boost Equity Returns Use our tool to budget and to work out costs and cash flows for your loan. Once secured, venture debt can be drawn down over time, making it perfectly suited to acquisition growth strategies. Its principal place of business is 4th Floor, 15 Crinan Street, London, N1 9SQ and its registered address is 1 Vicarage Lane, London, E15 4HF. BOOST&Co provided Simfoni with a £2m growth capital loan, which the company is using to expand both its operational base and its sales and marketing teams. Here’s how to impress them, Venture debt 101 – your top questions answered, Why taking easy decisions is often the hardest thing for entrepreneurs to do. So here’s a look at how we define a scale-up that is ready for venture debt. We want to know about your business model, your history, how you win clients and your prospects for growth. The company secured a £2m growth capital loan from BOOST&Co, which it is using to expand its routes to market, increase its marketing efforts and continue product development. These types of loans are particularly effective for SMEs that are yet to achieve profitability but have an established business model and clear prospects for growth. Menu. A CBILS loan with our partner Growth Lending … Stride said in a statement on Wednesday that the venture debt firm will be a strategic partner of Pocket Aces’ growth journey with this investment. You know what success takes, so why wait? is funding aimed at high-growth scale-ups, provided by specialist lenders. The London-based company, which has contracts with well-known names including Kellogg’s, Hamleys and Keurig Dr Pepper, aims to make its clients resilient, responsive and adaptable to change by ensuring that their businesses are robust and flexible enough to cope with the demands of the future, not just the challenges of today. As of December 31st, 2019 … The company provides growth loans and venture debt solutions to innovative SMEs based in Europe. The spend analytics and buying automation business specialises in driving operational improvement and cost reduction for its customers, which include a variety of blue-chip consultancy firms. is a mobile virtual network operator that helps companies to use the “internet of things” by providing the connectivity they need, plus a modular platform to connect, manage, secure and bill remote applications. But how do fast-growing companies fund ambitious growth strategies, at a time when banks’ support for SMEs is declining? Acquisitions BOOST&Co Culture Invoice financing Partners Venture debt Venture debt for MRR Use of funds Acquire a business Bridge the gap Buy out a business Extend cash runway Factor your invoices Invest in change Because venture debt lenders focus on a firm’s enterprise value and business model rather than its historical financial performance, businesses do not need to be profitable to be eligible for these types of loans, although they must be generating revenues when they apply. Get leadership tips from chairman Charles Towers-Clark, author of The W.E.I.R.D. is a specialist in mobile data security and compliance, offering businesses government-grade encryption for secure communications across voice and conference calls, messaging video and data-sharing. Pod is based in Cambridge, with offices in Spain, Hong Kong, the US, Mexico and Nicaragua. 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