Lloyds provides Lovefilm with £10.5m in debt funding

Index, Balderton and DFJ Esprit-backed online DVD rental service Lovefilm has received £10.5m (€11.5m) in debt funding from Lloyds TSB’s corporate markets division.

The capital is designed to repay existing debt and invest in video-on-demand technology.

Lovefilm merged with Video Island in 2006 to create one of Europe’s largest online DVD rental stores.

In March 2008, the business acquired Amazon’s UK and German DVD rental divisions. Amazon made a substantial cash investment in Lovefilm at the time, making it the company’s largest shareholder.

After a high-profile marketing campaign over the holiday period, Lovefilm now has more than one million subscribers.

In a statement, the company said it turned profitable in 2008 and expects to grow income 50 per cent from the last year.

The business is expected to benefit from the “stay-at-home” culture brought on by the recession.