Revenue Based Financing For Startups

Revenue based financing provides an interesting alternative pathway that can be better for both startups and for investors.

Revenue based financing for startups. As venture capital funding dries up revenue based financing is looking increasingly attractive for many startups. Revenue based financing provides an interesting alternative pathway that can be better for both startups and for investors. Rbf is a complementary way to finance your business alongside a vc round or even for bootstrapped businesses in growth mode. For companies with predictable revenue and a clear path to growth this is a way to increase working capital quickly and launch marketing campaigns that have so far been a dream.

Revenue based financing facilitates healthier relationships between investors and founders as investors returns go up when the startup grows faster. By julia neuman in berlin 4 june 2020 as venture capital funding dries up due to covid many startups have found themselves looking for alternative financing opportunities that don t involve raising equity. Revenue based financing sometimes known as royalty based financing was used by oil investors in the early 20th century to finance oil and natural gas exploration and later by the pharmaceutical industry hollywood and energy companies. As a result both the investor and the entrepreneur are focused towards growing revenue.

Revenue based financing rbf sometimes referred to as royalty based financing is a type of financial capital provided based on cash that a company receives from sales of products and services. Revenue based financing presents a real opportunity to startups with a certain profile and can be the perfect complement to your existing funding equity based or not. When a startup takes outside money there are many different pathways sec exemptions that can be used and there are many different types of deal terms for that investment. In other words with rbf investors provide a lump sum of capital in exchange for a fixed percentage of monthly or daily revenue.

Wayflyer an irish e commerce revenue based financing and marketing analytics platform bagged 10 2m nearly 8 6m seed capital funding. Revenue based financing which helps tech entrepreneurs get to the next level without giving up equity board seats or personal guarantees at lighter capital we don t take equity or ask. Nathan pamart founder of pulse sees revenue based financing as a non dilutive solution for founders who are looking to reduce the time they spend fundraising and with more flexibility than debt.