Alex McCracken is a managing director in Silicon Valley Bank UK. In this article, he explains why debt is potentially a good growth financing strategy for tech businesses.
As venture capital continues to flow into the UK, with Beauhurst reporting £3.2bn equity funding into UK companies in H1 2018, there is a corresponding increase in the range of debt financing solutions available to tech and life science companies.
Larger tech businesses are raising levels of debt previously unheard of, such as Spotify’s $1bn in convertible debt, and online retailer The Hut Group extended its debt facility to £500m to finance acquisitions.
Debt can be an effective way of preserving ownership for management as a company grows.
With a variety of debt financing solutions now available, these are the main debt structures and their key uses:...