Funding is the lifeblood of businesses. Without capital, even the most promising ventures will fail. But it’s often a trade-off — founders cede some control and ownership in return for funding. London-based AshGrove Capital, however, offers a different route, providing non-dilutive credit solutions, specifically tailored to the needs of small and medium-sized B2B software and services companies.
Co-founder and partner of AshGrove Capital, Jonathon Ferguson, joined TechTalks with TFN to discuss their funding philosophy, inclusion in funding and scale-ups, and his take on the wider landscape, from AI to geopolitics.
Check out the full episode here below
An alternative to equity
AshGrove was founded in 2019 by three long-time colleagues: Jonathon Ferguson, Phil Fretwell, and Ilkka Rantanen to address the shortage of mid-sized growth funding. “When you think about providing €10—€50 million of financing to these businesses to help them grow, there’s a massive under-supply of capital,” Ferguson explained. “That’s been structurally the case, and growing, for more than 20 years.”
AshGrove also stands out for its non-dilutive approach. “We’re providing non-dilutive growth capital to founders,” Ferguson said. “That allows them to invest in their business. It could be investing in R&D or marketing, financing bolt-on acquisitions, or entering a new market; the common theme is to drive growth.”
Typically, offered over four-to-seven years, the model and size is aimed at supporting founders through a critical period of early growth as their startups gain traction and mature.
AshGrove’s ethos is also very much about partnership and support with their portfolio companies. Ferguson speaks of the importance of clarity, both in AshGrove’s mission and the companies they support.
For founders, it’s about how the capital will benefit them. “‘Why do I need that capital? What am I going to do with it? How is it going to grow my business quicker?’ If they can answer those questions, it will be hugely suitable and accretive to them,” he said. “What that enables us to do is be a really powerful partner.”
Diversity for perspective, not box-ticking
AshGrove also takes pride in understanding their portfolio companies. “One of the important things, when we sit across the table from a founder, is you’ve got to understand their business,” Ferguson said. AshGrove focuses on software and B2B recurring services, but Ferguson points out that they share a more fundamental connection with founders: “We’re founders ourselves; we started our own business. We understand the kind of the burden on not just on time, but on the pressure around driving growth and managing a team.”
Inclusion and diversity has also become a core part of AshGrove’s approach. “Diversity and inclusion in our business is not a nice-to-have; it’s an essential ingredient in how we operate,” he told us.
The rationale is simple: improving diversity is good for business. “Getting people from diverse backgrounds with diverse perspectives, diverse upbringings, and diverse education only serves to improve decision-making,” he explained.
They apply the same thinking when considering funding, with diversity also acting as a proxy measure for the governance within a growing business. But Ferguson added that they also consider a range of diversity that goes far beyond those that typically fall under that umbrella. “When we look at companies, we’re looking at diversity not just in gender or ethnicity, but in thought process — whether people come from finance, operating backgrounds, or different industries.”
Preparing for opportunity in volatility
That improved decision-making might be helpful at a time of uncertainty. Ferguson takes a considered view of the AI boom. “Every single portfolio company we have has AI embedded somewhere within their product,” he said. But he qualified that involvement: “we differentiate between generative AI and functional machine learning that’s actually being used by customers.”
He notes that, despite the hype, there are still significant barriers to AI adoption, not least concerns about data and uncertainty about potential regulation. Together with uncertainty about trading policy, it can make founders hesitant, he said. “Founders are looking for stability: regulatory stability, signalling from governments, and understanding around trade rules — because uncertainty is not helpful for founders because investors pause.”
However, he added that uncertainty can also be beneficial. “Volatility can be an interesting time to invest — if you’re agile, and you have capital, there are real opportunity sets available,” he said. His advice to founders was to ensure they are in a position to take advantage of the chances they see. “Focus on capital efficiency and discipline. Understand the levers that drive your business and stay true to them. It preserves your optionality.”
AshGrove is also true to that principle. Their latest fund, €650 million, is over one-third invested. They have been very active in the UK & Ireland, Nordic and DACH regions, but their growing reputation and thematic approach to software and tech-enabled services has seen them invest in companies all across Europe.
Focused, disciplined and founder-friendly
AshGrove’s approach has met with success, with strong performance from their first fund’s investments, and their Fund II investments promising similar success.
As Ferguson comments, that success owes a lot to the typical growth business approach: “We’re focused, rather like founders, on remaining disciplined, remaining focused on the task at hand, and growing our business — making sure we deliver on what we say we’ll do.”
