The innovation economy, often misunderstood by traditional lenders, is an underbanked asset class offering attractive risk-return profiles delivering low return correlation, portfolio diversification and regular cash income.
We target founder-led firms which demonstrate exceptional revenue growth but do not wish to raise further dilutive capital, such as those in the software, AI/data/cloud, gig, sustainable energy, and circular economies.
Our experience demonstrates the appeal of asset-backed lending to the innovation economy compared to major market benchmarks. A key advantage for institutional investors is the strategy’s low correlation (typically circa 0.3) to credit benchmarks and out-performance (typically by 400-500bps) without financial leverage.
Channel achieves this competitive edge through a rigorous and time-tested approach to asset-backed investing:
- Data-led Underwriting: We go beyond traditional credit measures and identify alternative data sets that signal threats to reputational, legal, market, and financial standing, and overlay a battery of stress testing on key variables.
- Technological Reliance: We use technology to ingest and assess large amounts of data in origination and portfolio monitoring, enabling rapid, AI-driven risk decisioning ensuring performance compliance. Our technology provides real time monitoring of firm KPIs and any covenant violation,
- Robust Risk Mitigation: We deploy robust risk mitigation policies, including securing finance against short-term, self-liquidating financial assets. Further credit enhancements may include credit insurance. overcollateralisation and borrower alignment of interest features. We have adopted a 3LOD governance framework with experienced risk managers at the helm
- Diversification: Loan portfolios are diversified across a wide range of borrowers, geographies (including the North America, UK/Europe, and the Gulf region), as well innovation economy subsectors and collateral types.
By providing private credit into this underserved market, we seeking to play a role in tackling the signficant funding gap facing innovation economy firms. We also provide institutional investors with high-performing private credit product that is essential for portfolio construction in today’s complex markets.
For a full breakdown of the risk mitigation strategies and performance data, download the complete report, Filling the Innovation Economy Lending Gap.
About Channel
Channel is a leading global alternative asset manager with deep industry expertise that deploys private capital across asset-based lending solutions to the innovation economy and specialty finance sectors. Since 2007, our investing expertise has served the financial return needs of our clients and provided businesses with innovative debt capital solutions for growth. As of September 30, 2025, Channel had approximately $26 billion in cumulative capital invested and facilitated financing in over 35 countries. For more information, please visit www.channelcapital.io.
