Using smart alternative funding to scale

Nov 7
4 min read

What founders can learn from OakNorth and Whittard of Chelsea

When most founders think about funding, they jump straight to equity: Pitching VCs, giving away shares, and celebrating big valuations.

But what if there’s another path to growth? One that lets you scale without giving up control.

In this quick-fire session hosted by our partners at OakNorth, Adam Hunt, Associate DIrector, Business Banking sat down with Tom Baker, CFO of Whittard of Chelsea, to unpack how debt financing can be a founder’s best-kept secret for growth, when done right.

The conversation got real about cash flow, funding strategy, risk, and what it takes to build trust with your bank. Here’s what every founder should take away.

Whittard of Chelsea: A 138-Year-Old Brand Still Taking Risks

You probably know Whittard for its premium tea, coffee, and hot chocolate. But behind the shelves is a brand that’s lived through administration, private equity ownership, and a full turnaround story.

After the 2008 financial crash, Whittard hit the reset button. Fast-forward to today:

45 stores across the UK (flagship in Covent Garden)
10–12% annual sales growth
30% EBITDA growth in recent years
25% like-for-like footfall growth - in retail, no less

And yes, they’re taking bold swings, including a pop-up store in Hong Kong.

Tom Baker, Whittard’s CFO, credits part of that comeback to smart use of debt financing, not equity.

Why Whittard Chose Debt Over Equity

Tom didn’t mince words:

“We wanted to grow fast, but not give up control.”

Here’s how he broke it down for founders weighing their options:

The Case for Debt Financing

Keeps ownership intact - no dilution.
Can be tax efficient.
Works well when you have predictable cash flow and solid margins.

The Catch

You need to prove you can service the debt. That means strong cash flow, realistic forecasting, and the discipline to manage working capital tightly.

For Whittard, it was worth it.

“We set a goal to increase the business valuation by £60 million in three years and debt financing helped us do that without giving away equity.”

Founder Takeaway 1: Master Your Working Capital

Before you go chasing funding, get your financial house in order.

Tom’s advice was simple:

“Your first source of growth capital is your own efficiency.”

That means:

Get a handle on cash flow timing.
Negotiate smarter with suppliers.
Use working capital (stock, payables, receivables) as a tool for growth.

Only when you’ve done that should you look externally, whether that’s debt or equity.

Founder Takeaway 2: Build a Relationship with Your Bank Before You Need It

This was one of the strongest messages from both Adam and Tom.

Don’t wait until you’re desperate for funding to knock on a bank’s door.

“Talk to your bank early, even when you’re not raising,” said Tom. “It builds trust. Then, when you do need debt, they already know your story.”

A good lender wants to be your partner, not just your creditor.

That partnership is built on:

Transparency - about challenges, risks, and setbacks.
Credibility - demonstrating control over cash flow.
Consistency - keeping your numbers (and your story) straight.

Founder Takeaway 3: Be Honest About Risk

OakNorth’s due diligence is known for being deep and that’s a good thing.

When Whittard pitched for debt finance, OakNorth’s senior management grilled the team on everything from supplier terms to store-level profitability.

“It was thorough,” said Tom. “But it showed they really wanted to understand the business. That’s what partnership looks like.”

Their support gave Whittard confidence to take strategic risks, like testing international markets, with a lender that understood those bets.

What OakNorth Looks for in a Borrower

Adam shared a few non-negotiables for founders considering debt:

Trading History: A few years of operating data and proof of concept.
Financial Health: Ideally break-even or profitable.
Strong Leadership: Experienced, reliable management team.
Risk Management: Clear understanding of your weak spots and mitigation plan.

Debt isn’t just for corporates but it is for founders who know their numbers and their risks.

Bonus: A Few Words on Invoice & Inventory Finance

For founders still building financial discipline, Tom shared how Whittard used invoice financing after its administration period - essentially borrowing against sales invoices to smooth cash flow.

Tip:

Expect around 8% interest.
Larger banks like HSBC tend to offer more competitive rates than niche providers.
Inventory financing is niche and tricky - few banks offer it, and it’s better suited for large, asset-heavy businesses.

Retail Success in a Tough Market

Even with all the finance talk, Tom reminded founders that money isn’t everything.

Whittard’s recent success is built on:

Creating memorable in-store experiences (think tastings and demos).
Believing in the product - “good tea sells itself.”
Leveraging its heritage as a credibility builder.

“Heritage doesn’t automatically open doors,” Tom said, “but it gives lenders confidence you’ll still be here tomorrow.”

Final Takeaways for Founders

Debt financing isn’t about risk, it’s about leverage.

Used well, it lets you:

Grow faster without dilution.
Build long-term enterprise value.
Prove financial discipline that attracts future investors.

The key is transparency, planning, and building relationships before you need the cash.

As Adam summed it up:

“We’re here to help founders grow - not just lend. The best time to start that conversation is now.”

Debt can be a powerful tool for founders, but only if you understand your numbers, manage your risks, and choose the right partner.

Whittard’s story shows that even in a tough retail market, disciplined finance and trusted relationships can fuel sustainable, founder-led growth.

A full recording of the session is available to watch now.