- Might want to look at revenue-based financing. More of a debt instrument but if you can't raise or are getting bent over by equity investors, it is an option.
- I wish the funding is required to grow quick meme would die. Our company is revenue funded and growing at a very good clip. If you can make your customers your de facto "investors", life can be very good.
What are some financial institutions willing to work with startups via revenue financing?
Mind sharing some stats on the typical repayment rates & approval requirements? This sounds like a great way to finance B2B/enterprise type startups with revenue coming in the door from day 1.
There are a bunch. I know of a couple but don't know how good/bad they are so don't want to "recommend" anyone. But quick google search of revenue-based funding SaaS should turn them up.
I've heard they generally work like this:
- Will lend you money equivalent to 1/4 to 1/2 your monthly or annual revenue/billings
- Take a % of revenue every month as repayment. Your repayment goes up or down with revenue which is a good feature.
- Take some warrant coverage as well (1/3 to 1/5 of the loan value)
Some will want to be hooked into your payment solution to take money right as it comes in but as we've not done it ourselves (have only looked at superficially), I'm not sure if that's all that common.
For B2B SaaS startups who can customer-fund to traction, this is the way of the future IMO. Unfortunately, the revenue-based financing guys aren't doing a great job marketing themselves primarily cuz their funds are quite small so far.
That sounds like Paypal Working Capital, which they have been "suggesting" to me rather aggressively.
It makes a lot of sense. If you use Paypal for your business they have a good sense of your revenue, and they can be sure they're first in line for repayment.
Some data on how long companies typically wait between Seed and Series A rounds. The median is 349 days so raising for 18 months is smart.
https://www.cbinsights.com/blog/days-between-funding-rounds/
A couple of other notes:
- Might want to look at revenue-based financing. More of a debt instrument but if you can't raise or are getting bent over by equity investors, it is an option.
- I wish the funding is required to grow quick meme would die. Our company is revenue funded and growing at a very good clip. If you can make your customers your de facto "investors", life can be very good.