Why Do New Business Owners Seek Revenue-Based Financing?
Through RBF, a new business can secure working capital from revenue-based funding companies or providers by giving away a percentage of its future monthly revenues in return. Your financing provider will claim this agreed-on percentage of revenue until its total debt is fully paid back by you.
The prospect of dealing with a portion of control over new businesses is daunting for several entrepreneurs. As a result, they look for a non-equity form of financing as an alternative to venture capital funding. This is what leads them to revenue-based financing.
What are some of the reasons why you should seek revenue-based financing from another company? One of the benefits is that if you choose it over equity or VC financing, you will be able to keep the equity in your new business. Taking on VC financing would mean you were handing over some of the control you had over your own company. Revenue-based financing companies give capital and ask for their amount back, in addition to interest, over time as you grow your business. In contrast, VC financing providers give capital and demand control of and monetary returns from your company.