INSUBCONTINENT EXCLUSIVE:
More posts by this contributorThis guest post was written byDavid Teten, Venture Partner, HOF Capital
You can follow him atteten.com and@dteten
Revenue-Based Investor VC
back their investors with a fixed percentage of revenue until they have finished providing the investor with a fixed return on capital,
We have a special program if you are pre-seed and need product development
Our wheelhouse is bootstrapped (or lightly capitalized) SMB SaaS
We make fast, data-driven credit decisions for these types of businesses and show Founders how the math/ROI works
recurring contractsARR of $500K+At least 12 months of customer history, generally 20+ enterprise customers or 200+ SMB customersRational
burn profile, up to 50% of revenue at close, scaling downCapital need of up to $1.5M over next 12 monthsBenefits:Non-dilutive, flexible
credit offerings that fit SMB or enterprise SaaSFacility sizes of 2-5x MRRRepaid 12-36 months with ability to prepay at reduced costFor RBI,
return caps of 1.2x-1.8x and cash share rates of 3-10%Multiple draws available once history establishedAbility to scale payments to provide
Corl can fund up to 10x your monthly revenue to a maximum of $1,000,000
Payments are equal to 2-10% of your monthly revenue, and stop when the business buys out the contract at 1-2x the investment
Buyout.The Contract Buyout Rate is 1-2x the Investment Amount, depending on the risk of the business.To be eligible, a business must have at
least $10,000 in monthly revenue, at least 30% gross margins, and post-revenue for at least 6 months.According to Derek Manuge, Corl CEO,
data points that are analyzed in real-time
We collect more data on an individual business than, to our knowledge, any other RBI investor, through our application process, data
partners, and various public sources online
We have reviewed the application process of other RBI lenders and have not found one that has more API connections that ours
We have developed a proprietary machine learning algorithm that assesses the risk and return profile of the business and determines whether
to invest in the business
companies have applied for funding with Corl
The following information is based on companies funded by us and/or our capital partners:The average most recent monthly revenue is
$331,229The average most recent annual revenue is $1,226,589The average most recent annual profit is $237,479The average gross profit margin
is 55%.The average monthly operating expenses is $70,335The average cash balance is $191,164The mode purpose for funding is (in order of
frequency) Sales, Marketing, Market Expansion, Product Development, and Hiring Employees.30% have been operated by females, 70% have been
According to John Borchers, Co-founder, Decathlon is the largest revenue-based financing investor in the US
Unlike many RBI investors, a full 50% of our investment activity is in non-tech businesses
Like other RBI firms, Decathlon does not require warrants, governance involvement, or the types of financial covenants that are often
associated with other venture debt type solutions
Capital: Earnest is not technically RBI
Shared Earnings Agreement, a new investment model developed transparently with the community, and designed to align us with founders who
the company or raise more financing
Feenix Venture Partners has a unique investment model that couples investment capital with payment processing services
The credit card processing data provides the investor with real-time sales transparency and the CCP fee margin provides the investor high
current income, with equity-like upside and significant recovery for downside protection
Additionally, portfolio companies are able to access competitive and often non-dilutive financing by monetizing an unavoidable expense that
is being paid to its current processors, thus yielding a mutual benefit for both parties.Feenix focuses on companies in the consumer space
across a number of industry verticals including: multi-unit Food - Beverage operators, hospitality, managed workspace (office or food
halls), location-based entertainment venues, and various direct to consumer online companies
Their average check size is between $1-3 million, with multi-year term and competitive interest rates for debt
Additionally, Feenix typically needs fewer financial covenants and can provide quicker turnaround for due diligence with the benefit of
transparency they receive by tracking credit card sales activity
Capital Partners, LLC is building a comprehensive ecosystem to empower underrepresented founders to become leading premium wage job creators
We provide revenue-based funding and business acceleration support to service-based small businesses located outside of major capital
veterans, especially teams and businesses located in low to moderate income areas
Our proprietary business accelerator programs, learning platform, and growth methodologies transition these underserved service-based
businesses into companies with $5 million to $50 million in recurring revenue
They are tech-enabled companies that provide high-yield investments for fund limited partners (LPs) that perform like bonds but generate
returns on par with equity investments
Partners works with hundreds of entrepreneurs
Three tracks of pre-funding accelerator programs determine the appropriate level of funding and advisory support needed for each founder to
achieve their desired expansion: 1) Fastpath for larger companies with $2 million to $5 million in annual revenue, 2) Founders Growth
Bootcamp program for companies with $250,000 to $2 million in annual revenue, and 3) Elevate My Business Challenge for companies with
Programs are offered in both online, in-person, and hybrid format with cohorts of leadership teams for an average of 10 companies
Most programs culminate with a Pitch Day and Investor Networking Event where the companies present their newly defined and expanded growth
After completion of the relevant pre-funding program, FFCP will review company funding applications and conduct due diligence
FFCP-approved companies receive revenue-based loans of up to $1 million to support the implementation of a customized 5-year growth
playbook for their businesses
FFCP uses its proprietary performance technology platform, structured growth program curriculum, and executive-level coaching operations to
assist funded companies with the development, implementation, and iteration of their custom 5-year growth playbook
Companies repay loans with growth revenue generated over a 5-year term, capped at 2x the amount financed
Companies gain predictable revenue streams with significant and measurable increases in revenue and profits to graduate to either
secured a $100M credit facility commitment from a major institutional impact investor
This positions F1stcp to be the largest revenue-based investor platform addressing the funding gap for service-based, small businesses led
We work with founding teams in the Mountain West (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming) who have
Pied Piper Inc needs funding to accelerate customer acquisition for its SaaS solution
GSD Capital loans $250,000 to Pied Piper taking no ownership or control of the business
On a 3-year term, the cap amounts typically range from 0.4-0.6x the loan amount
Each month Pied Piper reviews its cash receipts and sends the agreed upon percentage to GSD
If the company experiences a rough patch, GSD shares in the downside
Monthly payments stop once the cap is reached and the loan is repaid
date the founders and investors agree upon) and a % of gross revenue shared to repurchase the shares
With v3, a team can repurchase up to 90% of the original equity option back at any point prior to a qualified financing through monthly
revenue share payments, a lump or some combination of both until they reach a 3x cap
of its monthly revenue up to a predetermined return cap of 1.5-2.2x over up to 5 years
We can usually provide capital in an amount up to 30% of your ARR
Our approach allows us to invest without taking equity, without taking board seats, and without requiring personal guarantees
Harrington, Co-Founder - Managing Director at Novel Growth Partners, observes that he sees two categories of RBI:Variable repayment debt:
money gets paid back month over month, e.g., Novel Growth PartnersShare buyback structure, e.g., Indie.vc
support, and ancillary revenue such as touring, merchandise, or licensing) per quarter
PodREV terms are 7-15% of revenue for 3-5 years, depending on current traction, revenue, and projected growth
At any time you may also opt to pay down the revenue share obligation in full, as follows:1.5x the initial funding in year 12x the initial
Return method: Small percentage of monthly revenue
Company maximizes equity upside from growth
Investment structure: 5-year horizon
This means that we have a tremendous amount of resources that we can leverage for our companies, and our companies see us as being quite
finance loans to fill a need we saw for our own B2B SaaS companies
No personal guarantees, board seats, or equity sweeteners
The firm has provided more than $875 million in small business loans in its history, and is currently extending about $10m/month in RBI
revenues, expenses and cash flow
After all, since this is a revenue-based business loan, we want to make sure revenues and cash flow are consistent enough for repayment
Capital Source was selected in the 2015 - 2017 Inc
5000 Fastest Growing Companies List
Note that none of the lawyers quoted or I are rendering legal advice in this article, and you should not rely on our counsel herein for your
Thanks to the experts quoted for their thoughtful feedback
Thanks to Jonathan Birnbaum for help in researching this topic
