The Internet is Discovering Revenue-based Financing
Today’s Business Insider has a brief article on revenue-based funding. Unfortunately the title is very misleading:
This leads the reader to conclude that this firm invests in startups. The problem is that they don’t. If you read the article you eventually come to this paragraph which sets the firm’s criteria straight:
Also, the VC model really only works for the “home-runs” so this approach makes sense for great businesses that make money but aren’t swinging for the fences. “We think businesses that make $1-5m/ year in revenue are great businesses and our long term vision is to make it super fast and simple for those businesses to get capital.” They believe a company that’s doing $1 or $2 or $3 M in revenue, with potential to go to $10 M or $20M, is still an awesome opportunity and deserves access to capital.
Yep, your “startup” has to already have one to three million dollars in revenues to qualify for a loan. That’s no longer a startup. So what’s the option for startups when it comes to revenue-based funding? Well, as always you need to find some potential investors yourself and then offer to use a Revenue Royalty Certificate (RRC) to structure the deal.