Start. Disrupt. Scale. Succeed.
As Great Britain’s biggest bank for business1 and a major backer of UK technology, media and telecom (TMT) companies, we understand that high-growth SMEs are the lifeblood of the economy, driving innovation and job creation. Many have developed a differentiated and often technology-led product that is disrupting markets with a growing customer base.
Led by excellent management teams these businesses are scaling rapidly, but many are pre-profit and investing for growth with complex financing needs. Returning to equity investors to fund them is expensive, means further equity dilution and can be a long process. This is where NatWest’s Venture & Growth Finance comes in, offering an alternative: a debt solution that could extend the cash runway, fund expansion plans, and bridge the period to profitability without giving up new equity.
What is it?
- NatWest’s Venture Debt product is flexible debt finance of between £2m to £15 million for up to 4 years, targeted towards the specific needs of high-growth UK technology companies at the scale-up stage, which have already secured the backing of institutional Venture Capital investors.
- Venture Debt augments an equity fundraising, providing a lower cost source of capital to fund a range of business development objectives. Most borrowers will be targeting a transition to sustainable profitability over the term of the facility.
- Eligible borrowers can often achieve a higher debt quantum and a more flexible facility through our Venture Debt facilities than other early-stage debt products, such as, for example, invoice finance or revenue-linked facilities.
- As a debt instrument, we provide Venture Debt over a defined period with an interest cost payable monthly throughout the term and repayment of the principal made over the life. The loan is senior-ranking, meaning that it is repaid first with security over the company’s assets.
- At NatWest, we understand high-growth businesses and as a result we aim to offer as much flexibility as possible. This includes, amongst other things, the ability to offer revolving credit facilities in addition to more standard term loans.
How do borrowers benefit?
- No equity dilution: NatWest’s Venture Debt product is non-dilutive and replaces the equity warrant mechanism used by some lenders with a clearly defined back-end fee, thus eliminating any dilution while also offering certainty on the total cost associated with the loan.
- No loss of control: Unlike equity and some debt investors, NatWest doesn’t seek any control over your business or representation on your board.
- A source of lower cost capital: The all-in cost of debt to drive business growth is materially less than new equity, which helps ensure the most efficient funding mix whilst boosting the return to equity investors.
- Faster time to raise: The transaction process for Venture Debt typically takes between 6 to 12 weeks, considerably less than what is usually required for an equity raise.
- A strong banking partner: NatWest’s support for Venture Debt borrowers extends beyond a single debt transaction. With a sector-specialist relationship manager at your side and access to tailored support from product specialists across the bank, we’re focussed on accelerating your business growth.
Who is it available to?
- B2B SaaS (business-to-business software-as-a-service) is our sweet-spot and we have supported start-ups across a range of sectors including FinTech, HealthTech, RegTech, HR-Tech, and AdTech, amongst others
- Annual revenue of more than £2 million that is contracted or repeating and growing at more than 20% year-on-year.
- At least £6 million equity raised cumulatively, with a raise in the last 18 months from a venture capital or institutional investor.
- A funded business plan demonstrating a trajectory towards breakeven and profitability within the term of the loan.
To find out more about our Venture & Growth Finance and how we could support your high-growth business, contact us today:
Kit Maclaren – Director, Head of Venture & Growth Finance
Carl Bergholtz – Director, Venture & Growth Finance
Kristine Erwin – Director, Venture & Growth Finance
Finance is subject to status. Security may be required. Product fees may apply.
- Source: MarketVue Business Banking from Savanta at Q4 2022. Based on a survey of businesses with a turnover up to £1bn. 19% of
businesses in Great Britain (n=11,114) name a NatWest Group brand as their main bank. Excludes businesses using personal bank accounts.