Category: debt
November 24, 2019 Tristan Pollock via Medium: : The Emergence of Revenue-Based Venture Capital
“The advent for start-ups to seek alternative investment from qualified investors is due to both the myopia of VC companies, which they believe fit in their portfolio and highly inflexible terms for founders,” explains Carolina Abenante, the founder of contract management platform NYIAX. This myopia is what has brought about the rise of new venture capital firms that are focused on more than just growing fast in hopes of raking in a big return when the company goes public. (read more…)
CATEGORY: alternative financing, debt, resilience
November 20, 2019 Runway Growth Capital : These are the Companies Most at Risk if Venture Funding Dries Up
Companies with soft, monetizable assets such as intellectual property in the form of patents, software code and contracts that are interested in securing debt growth funding should move quickly because most commercial banks do not find their collateral as attractive as that of brick-and-mortar businesses. And, frankly, they simply do not have the wherewithal to understand these forms of collateral and the confidence to stand by these companies when the economy is turbulent. (read more…)
November 4, 2019 Lighter Capital : How Revenue-Based Financing and Venture Capital Funding Work Together
As alternative financing solutions attract more attention from entrepreneurs, some VC investors are noticing more startups are turning to these options for their growth and working capital needs, many times mixing and matching RBF with a term loan, line of credit with a forward commitment, or both. These flexible, non-dilutive financing solutions scale with a business’ growth, enabling entrepreneurs to focus on their business without giving up equity, personal guarantees, or board seats; it’s understandable why entrepreneurs are increasingly seeking such solutions to reach their next growth milestone. (read more…)
CATEGORY: alternative financing, debt, growth, VC
September 16, 2019 Bigfoot Capital : The Pros and Cons of Not Selling Equity
If you’re selling equity, it better be a really good opportunity where folks just want in and can live with ceding control. If you’re not, retaining control and operating flexibility is much easier. And you’ll likely spend a lot less time explaining why you’re doing what you’re doing. (read more…)
CATEGORY: alternative financing, debt, leadership
January 29, 2019 Tech Crunch : Startup Investors Consider Revenue Share when Equity is a Bad Fit
Revenue-based financing isn’t some groundbreaking new idea, at least outside of the venture world. A revenue-share deal typically involves a capital investment that is later repaid from a share in the revenue of a growing business. It has historically been used to invest in businesses with potentially predictable cash flow and high profit margins, from Hollywood movies to high-margin service businesses. But the concept has been gaining steam in the venture capital industry. An increasing number of venture funds are actively deploying revenue-share tools. Novel GP has a $12 million fund focused on revenue-share investments in software-as-a-service companies. Indie.vc recently raised their second $30 million fund that invests through a “profit-sharing” structure by which the fund receives disbursements based on net revenue or net income, depending on which is greater. Candide Group, Adobe Capital and our affiliated fund VilCap Investments are a few more examples. (read more…)
CATEGORY: alternative financing, debt, growth
November 30, 2018 Earnest Capital : Shared Earnings Agreement
A Shared Earnings Agreement (we shorthand it as SEAL) is typically used as a substitute for equity-like structures like a SAFE, convertible note, or equity. It is not debt, doesn’t have a fixed repayment schedule, doesn’t require a personal guarantee. The goal of a SEAL is to align the interests investors and founders in a wide variety of outcomes, while giving founders full control of their business and keeping as much optionality as possible open for the business. A SEAL is a long-term commitment that in most cases lasts for the lifetime of the business, so pick your partners wisely. (read more…)
CATEGORY: alternative financing, debt, risk
April 30, 2017 Tom Tunguz : A Spike of Venture Debt in Startups
Venture debt is an attractive way of financing a company’s operations because it’s less expensive and less dilutive than an equity round. As the amount of equity investing in Series As and Bs has exploded, venture borrowing has followed, and a new market has blossomed at the very latest stages. (read more…)
CATEGORY: alternative financing, debt, growth
April 24, 2017 Clement Vouillon via Medium : The Rise of Non “VC compatible” SaaS Companies
If their aim is to build fast growing companies with the help of VCs then it makes sense to work together. But if they prefer to do so by financing their business purely thanks to the revenue they manage to generate from their customers it’s fantastic too. There’s no “evil” or “angel” here, these are just two different approaches to building a business and everyone (founders as well as VCs) should chose its path wisely. (read more…)
CATEGORY: alternative financing, debt