How do you feel about debt?

Does it conjure up images of soaring interest rates, letters you don’t want to open and a bailiff knocking on your door at 7am?

I ask because every time I talk to people about debt - founders, friends, randoms at parties - I get the exact same reaction.

They pull a face. Like I’ve asked them to refinance their soul.

And I always end up saying the same thing:

Debt isn’t the enemy, a bad business model is.

The thing is (and I find myself repeating this constantly), debt can be a powerful tool. One of the most powerful, actually, if you know what you’re doing. It’s neutral. It’s just capital with a clock. But people approach it emotionally - like it’s morally loaded - and that’s where everything goes wrong in people’s minds.

Which brings me to one of my favourite examples - because it cuts straight through all the fear and noise.

Founder of bet365, Denise Coates, understands debt better than almost any founder.

In 2000, she walked into RBS, borrowed £15M against her family’s betting shops, bought the bet365.com domain off eBay for $25k and started building a £3.7B cash engine from a Portakabin in a Stoke car park.

She didn’t guess. And ironically, she didn’t gamble. She backed a proven business model and used debt exactly how it’s supposed to be used.

And the outcome speaks for itself.

Fundamentally…

1/ Denise mortgaged the family betting shops, borrowed £15M and scaled her family business to £3.7B in valuation.
2/ Debt worked because the business already had a predictable cash flow and a clear exit plan.
3/ Collateral + timing + future-proof product beat vague fear of borrowing every single time.
4/ You don’t need millions - use the assets you do have, borrow in sensible chunks and only to scale what already works.

Let’s look at what Denise Coates was actually working with in the early 2000s.

She was running her family’s high-street betting shops - decades of trading, steady profit, predictable footfall. These weren’t speculative ventures. They were stable, cash-generating assets that a bank could confidently value. 

In lending terms, this is prime collateral. Reliable, tangible and grounded in a business model that already worked.

The wider industry, meanwhile, was in a strange in-between phase. Online gambling barely existed. Live in-play betting wasn’t even conceptualised yet. The big bookmakers were still pouring money into physical shops, refits, leases and expansions. Every major operator believed the future of the industry was still going to sit on the high street.

But Denise could see something else forming.

This wasn’t blind confidence either. 

Denise has been deep in the numbers her whole life - running tills in her dad’s betting shops, learning how odds actually work, then going off to get a first-class econometrics degree. When she says the business is a cash engine, it’s safe to say that she had run the maths.

So the £15M wasn’t a leap of faith at all. 

It was a way to extract capital from a stable, proven estate and redirect it into a digital opportunity that nobody else in the market was claiming.

Plus, the structure was tight and intentional:

Collateral: the betting shops backed the loan

Cash flow: the retail business could comfortably cover repayments

Timing: the online window was opening

Strategy: build the digital platform while the shops paid for it

Exit plan: sell the shops to clear the debt and go all-in on digital

And the real glue holding it together was the time horizon. 

Money always comes back to time - when repayments start, how quickly cash comes in, how fast margins expand. bet365 had short-cycle revenue, a clear pathway to payback, and a window of opportunity that was widening by the month. 

That alignment is what made the whole thing viable.

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The £15M went straight into building the online platform - not patching retail gaps, not extending the shop estate, but developing the digital infrastructure that would become bet365’s core product.

And the sequence played out exactly as planned.

By 2005, the betting shops had done their job. They were sold to Coral for £40M, the loan was cleared, and the business was left with a clean balance sheet and a fast-growing online operation sitting in entirely new territory.

The timing ended up being almost suspiciously perfect. In 2005, the Gambling Act made it much easier to market betting, and by 2007 the iPhone put a casino in everyone’s pocket. By the time most operators realised what that combination meant, bet365 was already set up as a pure online player with the debt cleared.

From there, the trajectory speaks for itself:

Debt didn’t restrict the business in any shape or form, as the business model made debt easier to manage every year. As margins expanded and volumes soared, leverage became a strategic advantage rather than a liability.

And the mindset didn’t stop with the first raise.

Even today, bet365 carries around £1.13B in corporate debt, using it to fund global expansion while maintaining full ownership and complete decision-making control.

So, put simply: the £15M wasn’t a lucky break. It was the foundation for a business that outgrew every single VC-backed competitor in its category - without ever giving up equity.

People react to debt like it’s a ticking bomb, but the real danger usually sits inside the business, not the loan. Debt only becomes scary when the numbers don’t add up - weak margins, shaky cash flow, or no clear view of how the repayments get covered.

It’s similar to how we talk about gambling or alcohol.

Neither is inherently good or bad, but both get treated like moral failures rather than neutral tools. Alcohol is everywhere - celebrated, normalised, regulated - and yet the risk isn’t the drink itself, it’s how, when and why it’s used. Gambling works the same way. For some people it’s entertainment. For others it’s destructive. The difference isn’t access; it’s structure and control.

Debt sits in that same category.

In reality, it’s just another tool. Structured money, tied to time, nothing more. When your business is predictable and your economics are solid, borrowing doesn’t increase your risk profile - it sharpens it. It forces clarity. It rewards discipline. And it exposes weak models far faster than equity ever will.

That’s exactly what made the £15M workable for Denise: a model that was already generating cash and could comfortably carry the load.

When I posted about this on LinkedIn, there were all sorts of debates happening in the comments (which I won’t get into here), but one of the recurring points was along the lines of: “Well, not everyone has £15M worth of shops to mortgage”.

Fair, but that’s not the takeaway.

The principle scales down.

Collateral is simply anything a lender can value: equipment, inventory, vehicles, contracts, property, recurring revenue. Using it lowers the lender’s risk and massively improves your terms. 

Denise used betting shops because that’s what she had. You might have something smaller, but just as useful. The structure matters more than the size.

Debt works best when it’s pointed at something that will make the business stronger in the long run. That’s what made the bet365 raise so effective - every pound went into building the online platform, the technology, the infrastructure, the very thing the entire industry was about to pivot toward. 

She wasn’t plugging holes or buying time; she was building the next version of the business. If you’re going to borrow, borrow for the thing that compounds. The thing that increases margins. The thing that will make your cash flow more predictable, not less. 

Future-proofing isn’t optional - it’s the whole point.

One of the easiest ways to keep debt healthy is to treat it as a step-by-step tool rather than a massive, all-in commitment. 

Denise’s structure shows this clearly: 

leveraged the shops → built the online platform → sold the shops → cleared the debt → scaled again. 

It was sequential, not reckless. Borrow, deploy, prove. Then repeat if the economics improve. 

The danger comes when founders take on debt to test unproven ideas or hope a future raise magically fixes everything. Debt should accelerate what already works rather than subsidise an experiment you can’t predict. 

Keep it incremental and grounded in cash flow.

Used properly, debt doesn’t box you in - it opens doors you’d never get through if you relied on equity alone.

There’s a framework I came across in a book a while back that’s lodged itself in my brain ever since. 

You know when something is phrased so simply you almost get annoyed you didn’t think of it yourself? It was about leverage - the four kinds founders can use. Labour, capital, technology, media. And once I read it, I started seeing it everywhere.

Hiring someone? Labour.

Building a new platform? Technology.

Posting online (like I’m doing right now)? Media.

Taking on debt? Capital.

It sounds obvious, but it genuinely changed the way I look at how businesses grow. You realise you’re not just “making decisions”, but choosing which lever to pull next, and which ones you’ve been ignoring without even noticing.

It’s that debt, used deliberately, builds power. It buys time, protects ownership and accelerates everything that already works. 

That’s what Denise did better than anyone. And those principles hold whether you’re raising £50k or £50M.

If you’re still worried about debt - the fear of locking yourself into something you can’t unwind - I’m happy to talk through how your business can use it strategically. 

Just drop me a line: [email protected]

Till next time,

James