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How tech companies can use debt finance to navigate inflection points

How tech companies can use debt finance to navigate inflection points

What do you do when the things you used to do to grow your business and revenue… stop working?

Definition of an inflection point: A moment when a company must respond to a disruptive change in the business environment, or face a downturn.

Breaking Growth Plateaus

You start to worry that:

  • Your strategies are incapable of achieving your desired scale-up objective
  • You’re not keeping up with competition
  • Management is too involved in the day to day running of your company and not spending enough time thinking about the big picture

More importantly, you worry that hitting these and other inflection points will cause you to lose momentum and stagnate.

Like many other tech businesses, I have been there. I’ve been in the position where I’ve had to remodel my growth strategy.

Here’s the thing. It’s inevitable you’ll hit inflection points. Business growth isn’t always linear. More often than not growth happens in curves and loops.

To navigate inflection points, I recommend you assess the internal and external factors in your marketing framework and see how you can work through the challenges so that you can thrive and grow.

Let me show you how:

 

Product

First off, look at ways to fund R&D, bring new products to market, and upgrade existing offerings.

 

Price

Then explore strategies to generate more revenue from existing customers.

 

Place

If you’re concerned that you’ve reached the limit of your

market, assess externally focused growth strategies, such as:

  •    Expanding into new markets
  •    Acquiring target companies to increase market share

 

Promotion

After that, revisit your customer acquisition strategies (sales channels and marketing programmes.)

By the same token, explore ways to boost customer retention. Also, reduce churn rates.

 

People

Beyond that, you can investigate options for hiring more experienced management to supplement existing talent, such as a new COO, or CTO.

And at the same time, invest in existing employees.

 

Processes

Elsewhere, explore ways to streamline operations.

At the same time, invest in tools and platforms and data-driven processes to enable you to deliver the optimum customer experience.

 

Money

Finally, as always, cash is king. So match financial requirements to each inflection point.

Know that you can obtain funding from:

 

Banks

This option is limited, as tech companies do not fit their risk profiles.

 

Venture debt

Helps tech companies extend cash runways from one round to the next. What’s more, it gives you added time and a protective ‘financial’ cushion so that you can navigate inflection points before heading into the next round.

 

IP secured lending

Your IP assets indicate your company’s capacity to generate

value in the future. Therefore you can leverage your trademarks, design rights, patents and copyright to gain access to funding. With IP secured lending you can:

  • Get a cash runway and the time you need to navigate inflection points and get to the next equity round
  • Expand operations
  • Fund an acquisition

 

Acquisition finance

Helps you to:

  • Increase the value of your company
  • Realise cost and revenue synergies
  • Buy in an experienced management  team

 

SaaS capital depending on recurring revenues

Gives you access to future revenue so that you can invest in sales and marketing and product development.

 

And finally

If you’d like help securing funding to help you to navigate inflection points, drop me a line about debt advisory and brokerage services, and we’ll set up a time to chat.