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What is Revenue Based Financing?
Revenue Based Financing is a new, non-dilutive, transparent, fast and flexible financing method.
In concrete terms, RBF allows you to transform your future revenues into immediate cash flow. This allows you to release non-dilutive growth capital, unlike fundraising.
Moreover, it is less restrictive than the traditional bank loan, which is not very suitable and too complex to obtain for some company founders, especially for young companies. Unlike the traditional B2B bank, the RBF does not require material or personal guarantees, which are not very compatible with digital business models. In addition, it can be repaid on a monthly basis according to your turnover.
The benefits of Revenue Based Financing
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Simply put, FBR has many advantages, which are as follows:
- There is no capital dilution unlike fundraising.
- It is a suitable solution for online businesses.
- It does not require collateral unlike B2B banks.
- The FBR is quickly accessible and all procedures are done online.
- It is reimbursed based on performance.
- Revenue Based Financing is less expensive than traditional loans.
What is dilution?
Dilution occurs whena company issues shares and thereby causes a decrease in the percentage of ownership of existing shareholders in that company.
If, for example, you raise funds, your shareholders will have shares in the capital stock of your company.
FBR at Karmen
At Karmen, we finance your growth transparently (no additional fees and according to a pre-determined schedule), quickly (in less than 48 hours), non-dilutive (no equity investment), and flexibly (repayment is based on your revenue generation).
After analyzing your eligibility for FBR, Karmen advances your revenue with a commission of between 6% and 9%. At Karmen, we focus on your ability to increase your revenue sufficiently to cover loan payments and operating expenses rather than your primary profitability.
How is FBR the future of B2B banking and what are its advantages over other financing methods?
FBR vs. bank loan
Many companies use a bank loan to finance their growth. However, this method of financing often requires physical or personal guarantees that some start-ups cannot provide. Bank loans can also be complex for digital companies without physical assets.
The advantage of the FBR unlike bank financing here is that it does not require any collateral. Moreover, the repayment is made monthly according to a predefined schedule and according to your monthly income. You can thus adapt your repayment according to your generated turnover. It is made according to your performance, there is no interest as proposed by a banking institution.
RBF is therefore the future of B2B banking, as it is a more flexible solution for digital businesses.
FBR vs. fundraising
By investing in a start-up company, the venture capitalist is betting that the value of the company will grow to have a relatively early return on investment. When they invest, the fund takes a percentage of the equity as consideration.
While RBF investors are similarly betting on the growth of your company, the big difference is how they approach the bet.
Unlike venture capital, RBF does not expect extreme revenue growth or a quick exit from the company. Moreover, RBF investors do not take any percentage in the equity of your company, you remain the sole owner! You don't have to suffer the effect of capital dilution.
FBR vs. crowdfunding
Crowdfunding or participatory financing is a financing that relies on a system of collecting donations or loans. Crowdfunding gives the opportunity to a community of early adopters to participate financially in the creation or launch of a project through donations.
It is therefore a financing of individuals on sums often less important than the RBF loans: the RBF thus allows a B2B financing, more important and less risky than the individual financing. Unlike crowdfunding where the process can be long and unpredictable, RBF offers a 48-hour turnaround.
Why use FBR?
RBF can be used as a substitute for, or in addition to, other financing options. Although the use cases are agnostic in nature, there are some scenarios that maximize the potential of RBF:
Improve your key performance indicators and extend your runway
The RBF allows you to obtain additional le eway to pursue your growth and improve your KPIs, between two investment rounds for example. It also allows you to improve your runway by making additional cash available to the company.
Prolonging a lifting cycle without additional dilution
The RBF can allow you tobring an additional financial windfall without increasing the dilution of your capital following a capital increase. It is an additional boost to your growth, like a booster, while maintaining control over the company's capital. It is therefore perfectly feasible to use RBF as a complement to a fund raising.
Launch and foster a new growth opportunity
In the context of an internationalization, a change in regulations or recruitment, you may need additional financing.
The RBF is used to finance short-term growth actions (such as an acquisition), as opposed to raising funds to finance longer-term investments.
Accelerate your e-commerce growth through customer acquisition
Traditional financing methods often do not meet the needs of digital businesses.
The RBF is then the future of B2B banking by its flexibility and speed, now necessary for this type of business model. It can thus allow you to boost your marketing campaigns and acquire new customers in only 48 hours!
The future of B2B banking, yes but for whom?
RBF financing is aimed at digital companies, generally companies in the subscription economy (which is booming).
Types of companies
This system works particularly well for SMEs, startups or other growing e-commerce/digital and SaaS companies that have predictable and recurring revenues. The RBF allows you to finance your business based on your future revenues, turning them into immediate cash.
Here are some examples of digital businesses: SaaS software publishers, subscription-based businesses, D2C brands, service companies and many others...
Eligibility criteria
Karmen is a non-dilutive funding solution that helps digital businesses access instant growth capital. Instead of waiting for online or subscription revenues to be collected month after month, Karmen unlocks the annual value of those revenues, up front. Karmen's solution allows digital businesses to access instant growth capital, within 48 hours, to fund their growth expenses (customer acquisition, marketing, recruiting, technology and more).
For start-ups, we are often their first source of growth capital to help them accelerate before raising funds.
For venture-backed companies, we provide an additional source of non-dilutive, founder-friendly capital to help entrepreneurs achieve their growth objectives, while retaining ownership of their company.
There are three main general eligibility criteria for accessing this type of financing:
- Annual sales of at least €300,000;
- Be registered as a company for at least 12 months;
- Operate under a company.
So how do I know if my company is eligible for FBR?
At Karmen, nothing could be easier:
- Fill out the online form in less than 2 minutes available right here.
- Access our financing simulation.
- Connect your different accounts (your subscription management solutions (Stripe, Chargebee), your CRM (SalesForce, Hubspot, ...), your online advertising campaign solutions (Google Ads, Facebook Ads, ...)).
- Receive a financing proposal with a pre-determined schedule and commission.
- Get your financing in less than 48 hours.
Karmen is the future of B2B banking with its RBF financing offering. At Karmen, we want to make non-dilutive and uncomplicated financing available to everyone, based on three main pillars:
- speed: in less than 48 hours you can check your eligibility and receive your financing
- transparency: with transparent, straightforward commissions, a pre-determined payment schedule and no hidden extras
- independence : with 0% dilution of your company's share capital, you remain 100% in control .
Its flexibility makes RBF the future of B2B banking for digital businesses!
