This chapter introduces venture debt (VD), a little-known yet critical source of funding for a specific group of expanding and later-stage companies. Throughout a company’s life cycle, a myriad of funding options is accessible, ranging from equity to debt-based sources. In the nascent stages of startups, innovative funding sources such as business angel funding, crowdfunding, and initial coin offerings have gained prominence in recent years. Despite these advancements, a noticeable funding gap persists during the critical scale-up phase, when startups require capital to grow and internationalize their venture. Venture debt has emerged as a tailored solution, specifically designed to bridge this gap in scale-up financing and offering a lifeline to companies striving for growth but not yet eligible for traditional bank financing. One VD fund manager focused on European companies said: ‘What we have seen over the last decades is that entrepreneurs are getting more educated about how to start businesses and, more importantly, how to grow businesses. The more sophisticated entrepreneurs prefer VD because it is less dilutive, and they do not have to grant board seats to us like they do with the venture capitalists.’

Chapter 1 examines the ideas and ideology that informed Thatcherism’s overarching free market philosophy, from the re-constitution of macro- and microeconomic policy to the introduction of free market reforms. These were crucial in shaping financial reforms but there was a parallel set of macroeconomic objectives which also drove reforms. With trade in government debt periodically halted by gilt-edged buyers’ strikes in the 1970s and early 1980s, and the real possibility that this could topple a government, being able to sell government debt at a time and in the quantity of the Government’s choosing was a form of statecraft. The Thatcher government’s preferred means to this end – the introduction of an auction system to sell gilts – required structural reform of the Stock Exchange system because auctions were technically impossible under existing rules. Having come to this conclusion, the Government sought to harness international capital (to redress the increased volatility associated with auction systems) and ensure new technologies were captured by the Stock Exchange for it to remain a relevant, central global market. Thus, capital and new technologies were not just forces for change, they were elements to be exploited and, in the case of technology, controlled – at least for the critical period. The chapter considers the legacies of Thatcherite financial reforms, including the establishment of a new consensus on Britain’s political economy as the City came to represent a growth model for the economy, and the ramifications – including the Government’s role in the origins of subsequent financial crises.

This chapter considers three sources of early funding and support for new ventures. As will be apparent, these sources of early funding have only presented themselves since the early 2000s; judging from their adoption, they have resonated well, especially in the European context.

Entrepreneurs tend to recognize market opportunities on a fairly regular basis and are optimistic about their market potential. If they are serious about pursuing a perceived opportunity, capital is needed to transform the opportunity into a proposition that can be brought to the market. The challenge to obtain this capital is to generate proof of the added value of the proposition early on. That is where the sources addressed in this chapter come in.

Too often, Britain’s financial revolution has been attributed to the logics of market forces and new technologies. Reforms are deemed to have been inevitable, and often appear faceless. As the concluding chapter reaffirms, Survival Capitalism has sought to restore intent to this history. It has assessed responses to a whole range of factors by a host of actors and institutions as they reacted to threats and opportunities. It has traced an evolutionary process and shone light on the ways in which reforms were crafted by real people and shaped by their concerns and existing historically specific conditions. Accordingly, it has revealed the highly mediated and contingent nature of Thatcherite reforms and the constructed nature of markets – even international financial markets. Although informed by an over-arching philosophical framework, the Thatcher government was, in fact, as flexible and adaptive as the market approach it constructed. Deregulation was motivated by economic nationalism as well as free market ideology. The Government sought to deliver its monetary policy, maintain credibility and fund its reform programme at as low a cost as possible. It also sought to protect British interests and was not averse to intervening in markets when the need arose. Undoubtedly, the short-lived Truss administration applied the wrong lessons from British economic and financial history of the 1980s. As Big Bang 2.0 is an imagined growth strategy for the 2020s, Survival Capitalism is a timely reminder of the need to take seriously the importance of networks and culture when seeking to effect change.

This chapter will provide an overview of impact investing and how to finance social entrepreneurs. Social entrepreneurship is emerging at the intersection of three sectors: the public sector, the private sector, and the third sector (including non-profit organizations and civil society). It challenges the perceived boundaries between sectors and provides innovative solutions for social needs that are not adequately dealt with by public authorities, businesses, or traditional non-profit organizations. We view social entrepreneurship as a field of practice and social entrepreneurs as the individuals who set up and manage social enterprises. Social enterprises can adopt various legal forms and can be characterized by pursuing a social mission while competing in the market economy. In this chapter we refer to social enterprises as the organizations in which impact investors invest. They can pursue social and/or environmental objectives.

Investments in early-stage ventures are characterized by being private and by their ‘equity nature’, as discussed in the previous chapters, stressing the mutual dependence between investor and entrepreneur. Moreover, the investment is typically temporary and done between so-called ‘perfect strangers’ – that is, both parties have large information asymmetry and are faced with agency challenges yet will be condemned to one another because of the illiquid nature of the investment.