How to Launch Your Startup With Revenue-Based Financing
Yes, revenue-based financing can be used to finance startups. In fact it’s been used for many decades by sophisticated entrepreneurs and investors. The thing is that a lot of noobs are only now discovering it and acting like it’s something new. It’s not. Far from it. An instrument such as a Revenue Royalty Certificate (RRC) can be used to close foot-dragging investors who are stymied by unexpressed concerns over exits and valuations. The RRC does so by making these deal-killers irrelevant.
If you need to details on how to structure a revenue-based financing deal there is a product that I offer which provides a detailed explanation of how to put together an RRC, a spreadsheet that shows how to determine what is a viable royalty rate, and a sample RRC agreement. It can save you a lot of money in legal fees.