RevenueLoan Blog

November 30, 2010

Startups getting to revenue faster

Filed under: news — Christian @ 1:21 pm

As the barriers to starting up a new company continue to fall, the time from concept to revenue is shrinking. Watching the TechStars class of 2010 “graduate” a few weeks ago was a demonstration of that concept in action: 3 months from concept to demonstrating the product in action, and pitching to investors.

The Commuting VC (Michael Klein) posted the other day about “Why Superangels are a Godsend for Entrepreneurs”, and he taps into this zeitgeist as well:

Entrepreneurs can easily and quickly put a live product into market and begin receiving feedback and … may even begin producing significant revenue before raising large sums of capital, although scaling businesses still requires capital.

Which is where RevenueLoan comes in.

Without huge startup costs, it is possible for a tech company to get a product to market with a small initial investment and start showing revenues very quickly. Then they need investment to mature the product and expand it to support a rapidly growing user base.

“But where is the collateral?” the bank manager says. All he sees is a few Ikea desks and chairs, and some laptops, and he isn’t going to give some kids with laptops $250k to mature the product.

“But I want a 50% stake in the company” says the venture capitalist. For what? The product is built, the initial customers are flowing in, and now the VC wants an ownership stake? For what?

That’s where revenue based financing comes in. Leverage your growing revenues to fund the improvement of the product, and support the hockey-stick growth curve!

Ah, if only building a business was so easy. But now, with the RBF funding model, you don’t have to mortgage mom’s house or give away ownership to a VC. So build that business!

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