Start ups Financing Option: Revenue Based Financing

If you are  a fledgling start up, looking for some good financing options, have a look at the following options:

1) Friends and Family

2) Contests/Prizes/Accelerator Programs

3) Government Grants

4) Customer Financing

5) Vendor Financing

6) Convertible Debt

7) Preferred Stock

8 ) Venture Debt

9) Capital Equipment Loans & Leases

10) Bridge Loans

11) Working Capital Financing

However, there is one conspicuous absence from the list is Revenue Based Financing (RBF) . A revenue-based finance (RBF) investment provides capital to a business by “selling” an ongoing percentage of a company’s future revenues to the investor.

Revenue-based loans are, by nature, most appropriate for companies already generating revenues but without hard assets typically required to get bank loans. It’s especially applicable for companies that have lumpy, seasonal, or hard to predict revenues.

To know more about Revenue Based Financing, read ” Revenue Based Financing” by Andy Sack, written for AVC