Based Financing for Technology
WHAT IS REVENUE-BASED FINANCING? Revenue-based financing (RBF) , also known as royalty-based financing, is a unique form of financing provided by RBF investors to small- to mid-sized businesses in exchange for an agreed-upon percentage of a business' gross revenues. The capital provider receives monthly payments until https://bizblogpost.com/ c apital is repaid, along with a multiple of that invested capital. Investment funds that provide this unique form of financing are known as RBF funds. TERMINOLOGY - The monthly payments are referred to as royalty payments. - The percentage of revenue paid by the business to the capital provider is referred to as the royalty rate. - The multiple of invested capital that is paid by the business to the capital provider is referred to as a cap. CASE STUDY Most RBF capital providers seek a 20% to 25% return on their investment. Let's use a very simple example: If a business receives $1M from an RBF capital provider, the business is expected ...