Providing Startup Financing Solutions Since 2001

Revenue Based Financing

Revenue Royalty Certificates: Advantages of Revenue-based Financing Instruments

I have been writing about some of the advantages of raising startup capital using instruments such as Revenue Royalty Certificates (or Revenue Royalty Agreements, if you prefer). As soon as you sell any equity for capital the pressure starts to mount for a liquidity event of one type or another. As I mentioned earlier, investors can only make money through a liquidity event. That’s when they normally recover their principal plus any capital gain that has hopefully accrued. Continue reading

The Great Gaping Valuations Chasm Between Entrepreneur and Investor

Revenue-based Funding.

Revenue-based Funding.

I first started working with startups back in the late 1980s and can guarantee you that the one problem that never goes away is the Grand Canyon-like chasm between the entrepreneur’s and investor’s respective valuations.  Without getting bogged down with unnecessary detail, it usually breaks down like this. Whether the first-time capital seeker is looking for $50,000, $500,000, or $5,000,000, they always seem to settle around the magic 20% mark. That is they convince themselves that their startup is worth so much that whatever the amount being sought is, it should only require the surrender of 20% of the total equity.  Fair is fair, right? Continue reading