Startup Funding Espresso -- Revenue-Based Funding
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. Revenue-based funding makes a startup investment and pays back the investor at the rate of top-line revenue. This aligns the investor and founder to the same goal, to create a business and grow sales.\xa0 The higher the sales, the faster the payback to the investors and the higher the compensation to the founders. Revenue-based funding typically sets the payback rate at 1-3% of top-line revenue. In revenue-based funding, the investors receive a revenue share until they reach a predetermined payback amount. This is different from a loan which sets the payout rate regardless of the seasons or cycles within the business.\xa0 Revenue-based funding keeps early-stage investors off the cap table so it\u2019s clean for future investors. Once the payback amount is reached, the investors are finished and are no longer in the picture.\xa0 It works well for businesses that have recurring revenue and healthy margins. It\u2019s a good way to reduce dilution for the founders.\xa0 Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today. ___________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0 For Feedback please contact info@tencapital.group\xa0\xa0 Please subscribe, share, and leave a review. Music courtesy of