Venture debt: funding for earlier stage businesses to scale faster

Achieve next-level growth with £1m to £10m, tailored to your needs. Venture debt is less dilutive than equity and provides more capital, earlier in your development, than the banks. We help you to scale your business and achieve higher equity valuations. We don’t take board seats; we trust you to deliver your business plan.

How it works

Venture debt – a form of fast, flexible funding aimed at earlier stage, high-growth businesses – is usually provided by specialist lenders such as BOOST&Co. Loans can be structured to suit the borrower and tend to be priced individually, depending on the needs and circumstances of the business (for example, companies at an earlier stage of their development, or with a faster cash-burn rate, will normally pay more).

Venture debt is available earlier in a business’s life cycle and in larger amounts than loans offered by traditional banks, which is why this type of funding is particularly effective for fast-growing SMEs. Specialist venture debt lenders want to see an established business model and clear prospects for growth, but do not require a firm to have reached profitability or to demonstrate positive cash flows.

Moreover, venture debt products do not usually require borrowers to put up collateral against their debt, which is secured by a warrant instead. You can find out more by reading BOOST&Co’s guide to venture debt.

Why choose venture debt from BOOST&Co?

Venture debt is primarily seen as an alternative to diluting equity, but it can also solve many of the other challenges that growing businesses face.

By extending your cash runway, venture debt offers additional time for your business to reach its key goals and milestones, improving the chances of a higher valuation. 

It can also be secured very quickly – in around eight weeks – and doesn’t require the creation of board or advisory seats, saving valuable time and energy for your management team, too.

What we need

We are committed to investing in your firm’s success, so we are as interested in your current and forecasted performance, as we are your historical financial performance.

We want to know about your business model, how you win your clients, your targets for growth and how you plan to achieve them. We will then assess your firm’s enterprise value and future prospects for growth.

Although we are comfortable supporting businesses that are yet to reach profitability, we want to see existing revenues of £2m and a clear demonstration that the company is on its way to profitability.

What you can expect from us

Every application for funding from BOOST&Co is processed by people, not machines.

After you have submitted an application, our experts will quickly gain a thorough understanding of your business, which helps us to assess how much we can lend. We will then tailor your venture debt after further discussions with you.

The process usually takes six to eight weeks and our expert team will support you every step of the way.

The essentials

  • Are you eligible?

  • Proven business model
  • Revenues of £2m+
  • High growth profile
  • Profitability not required
  • All high-growth sectors considered
  • May or may not be VC-funded
  • Our terms

  • 1-2% upfront fee
  • 10-12% interest rate
  • 12 months interest-only
  • 24-48 months amortisation
  • Debenture security
  • 10-15% equity kicker
  • Customise your loan

  • Varied permitted use of funds
  • £2m-£10m loan amount
  • Tranches to suit your needs
  • Cost depends on overall risk profile

Frequently asked questions

1. What is venture debt? Click to expand answer

Venture debt is a form of financing, typically a non-convertible, senior secured loan. It is usually offered to venture-backed new age businesses, serving as a strategic tool to complement equity financing. If incorporated effectively, venture debt has various effective use cases for new age businesses, including projecting equity dilution, extending runway between rounds, financial capital investments and working capital mismatch, and creating a credit track record. 

2. How is venture debt different from equity funding? Click to expand answer

Equity is the most expensive source of financing for a business and the opportunity cost of allocating equity capital is high. Entrepreneurs therefore must focus on maintaining the optimum mix of capital between debt and equity. In the early stages, when the business is working on its product market fit and is yet to establish its revenue model, equity capital must be the primary external source of capital. When the company enters the expansion stage and must require additional capital to scale up, debt can complement equity capital by replacing it for predictable use cases.

3. When should venture debt be used? Click to expand answer

For most business owners, the ideal time to use venture debt is when you need incremental capital to accelerate growth, but without the equity dilution or when the capital needed is too small for an equity round.

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