Solving the equity dilemma and funding the intangible economy - Caple helps chip design and supply house EnSilica
Published: 7 November 2019 - Christian Lynn
Alternative SME credit specialist Caple has supported EnSilica, a chip design and supply firm, with a £3.7m fully unsecured loan. This will enable EnSilica to continue its expansion into high-growth sectors including automotive, space and the Internet of Things (IoT).
EnSilica funds the design and supply of silicon chips for customers and then takes a share of the revenues once the chip design is proven. Given the time between design and sales, the business needed additional funding to take on more orders and grow. This unsecured lending has helped EnSilica solve the equity dilemma. Without this finance, the business would have had to consider giving up equity to fund growth.
EnSilica found access to secured lending an issue because its business is based on intangible assets, such as intellectual property. It therefore lacked the tangible assets to put up as security to banks. Dominic Buch, managing partner and co-founder of Caple, had this to add: “Many successful businesses today are growing by investing in intangible assets, such as intellectual property and software. However, while banks can lend against the tangible assets in a business, they have more difficulty if a business has no physical assets to use as collateral.
“This creates a barrier to growth and may force businesses to issue equity instead of raising debt. EnSilica had this very issue and had previously considered giving up equity in the business. But now, with our unsecured funding deal, EnSilica can implement its growth plans without having to resort to equity funding and while retaining control of the business.”
Mark Hodgkins, chairman of EnSilica, replied as such: “Caple has an innovative and flexible service that removes the need for some privately held UK SMEs to finance their growth by equity funding and giving up value in their business. I would recommend Caple to like-minded growth companies, who are looking for an efficient and quick decision on funding for growth.”