RevenueLoan Blog

April 29, 2011

RevenueLoan is getting busy, and… so is RBF Girl?!?

Filed under: news — Christian @ 11:33 am

RevenueLoan is expanding in all directions at once! New deals are getting done, some hotshots have moved their desks closer to our to help us out for a bit, we are finding more ways to help small businesses find the funding they need, and it may be time for a bit of a makeover, too!

Whew! So much going on…

And in the midst of this, we have the latest installment of The Adventures of RBF Girl; in which our heroine expresses some deep feelings for the mysterious man from RevenueLoan… click below for all the juicy details!


April 14, 2011

RevenueLoan at 2011 Angel Capital Association Summit

Filed under: news — Christian @ 10:26 am
Small business loans for the "glass half full" set

50% water + 50% air = 100% full

Who would have thought investors would be packed standing-room-only at the crack of dawn to discuss “Revenue Structured Investments”? Sounds like a snoozer if there ever was one. Yet anyone showing up last minute might have thought they walked into a Southern-style auction as hands shot up and the lively discussion escalated. Why the excitement?

As panelist Thomas Thurston put it “it turns out, revenue based investing is sexy. It’s a way to invest in ventures without depending on an exit or liquidity event for great returns. Exit markets were relatively dead around five out of the past ten years. That’s a whole decade with around 50% illiquidity. As investors we must learn to fund ventures regardless of fickle exit markets.”

Thomas Thurston is an advisor to Seattle-based RevenueLoan and Executive Director of the Revenue Capital Association. He was joined by Rob Wiltbank, Professor at Willamette University and Venture Partner at Montlake Capital and Revenue Capital Management. The third panelist, Arthur Fox, has done revenue-based venture investments for nearly 20 years and is currently directing his third such fund, Eureka Partners.

Addressing angel investors and leaders of regional angel groups at the 2011 Angel Capital Association Summit in Boston, the panel covered top concerns including high level revenue-based concepts, alternate deal structures, and the implications of specific contractual provisions. The newly formed Revenue Capital Association was also discussed, generating strong enthusiasm and interest.

In summation, Thurston noted “as investors, we’ve always expected our portfolio companies to innovate. Ironically, what the past decade has shown is that companies need us investors to innovate too. We can’t sit back, use the same tools and expect a different result. It’s been a hard decade for ventures and investors alike. The path forward depends on our ability to innovate together, and revenue-based funding one of those promising innovations we’ve all been waiting for.”

March 18, 2011

The Sound of Flocking Wings

Filed under: news — Christian @ 10:36 am
Angel Investors or blackbirds?

The sound of wings is deafening...

The sound of wings flapping around our heads is so deafening right now, we feel like Tippi Hedren in Alfred Hitchcock’s film, “The Birds”.

But these aren’t the wings of birds we hear, these are the wings of angels!

Angel Investors, to be exact.

It turns out that investors are tired of waiting for the companies they invest in to have their big IPO/Sellout to finally see any return on their investment (if they get any return at all). Our success at getting paid early and often on our portfolio of RBF loans has caused them to flock into our space like seagulls on a beached whale.

We definitely take some responsibility for inspiring all kinds of johnny-come-latelys to join us in this arena of investing, however. Randall Lucas of RevenueLoan spoke to the Angel Capital Association recently and presented Revenue Based Finance In Two Acts, which by all accounts went over well. We have many Angel Investor friends who have watched our every move very carefully, too. And now the Angel Capital Education Foundation has an excellent, in-depth article on “Revenue Capital” (same thing; yet another name) as an attractive funding model for Angel Investors to pursue.

Dropping the whole catty facade for a moment, we are quite honestly thrilled to see the number of people moving into the RBF lending field. The whole reason we started RevenueLoan was to fund those businesses who couldn’t get growth funding elsewhere. And, to put it as plainly as possible, even if we had a billion dollars to invest we would still have to turn good businesses away. So welcome all ye investors! Join us in helping grow business in America. That way we all win.

March 11, 2011

The continuing adventures of RBF Girl!

Filed under: news — Christian @ 10:58 am

When we posted the “Animated Introduction to RBF” last month, we really didn’t know what kind of response to expect from our blog readers and Newsletter subscribers. We laughed at it – quite hard, actually! But we didn’t expect people to ask, “So what happened next…?”

Well, here is #2 in what might turn out to be a serial of RBF Girl animations!

Who thought THAT would happen?!?

Here is the next installment in the series:

March 2, 2011

RBF in the wild

Filed under: news — Christian @ 4:59 pm

Royalty Based Financing (aka Revenue based financing) is not new… our application of it is new.

The oil and mining industries have been using it for decades, and the music industry thoroughly abused it and earned themselves a bad name by doing so!

And now, TheStreet has just hired colorful financial prognosticator Doug Kass to write for them, using an interesting royalty-based model.

The plan is for him to earn a royalty off the subscribers to his Silver service on the site. (Alliteration FTW!)

It isn’t royalty based financing, but it is another interesting payment model. I wonder how many other sites will start to put their highest-read authors behind pay walls?

And what about incentives? Is this putting the incentives in the right place?

Whatever happens, it will be interesting to see how this relationship plays out…

February 17, 2011

The cracks widen in the VC funding model

Filed under: news — Christian @ 2:01 pm

A couple of recent articles are showing the ever-widening cracks in the venture capitalist model of funding. Basically, the VC idea is to buy a stake in a company at the lowest possible value, and then sell that stake later on at the highest possible value.

Unfortunately there are a lot of hurdles for a small business owner to leap successfully to get from concept to delivery to sell-out. And the vast majority of startup businesses fail to leap all those many hurdles.

VC territory is shrinking...

And that is why most VC funds lose money, according to Dan Primack at Fortune.

Add to that Mark Cuban’s belief that the current VC funding climate is just an elaborate pyramid scheme.

And finally, pile on the fact that the Wall Street Journal says VCs are pushing into the Angel space just to find deals they can fund!

The picture is pretty clear: VCs are like polar bears, fighting for the last remaining bits of ice in the arctic. Their home terrain is shrinking and they are desperately looking for other territory to conquer.

This illuminates investors favorite feature of revenue based financing: Pay back begins immediately!

If you get a RevenueLoan this month, your first payment is less than 60 days away. That means that the investment (our loan) begins paying off almost immediately, instead of waiting months or years for that big buyout or IPO… and waiting to leap every one of those business hurdles before getting a cent of your investment repaid.

For a traditional Angel or VC style investor who is fighting for an ever-smaller bit of the ice floe, the prospect of immediate returns has got to be a tasty thing…

February 10, 2011

RevenueLoan at the Angel Capital Assn

Filed under: news — Christian @ 1:35 pm

On a chilly February morning (4 Feb 2011, to be exact) Randall Lucas of RevenueLoan warmed the hearts of the Angel Capital Association members by showing them how to start recouping their investments immediately, rather than waiting for the usual buyout/IPO exit.

Presenting “Revenue Based Finance in two acts”, Randall used the familiar model of how to finance a big-budget movie, and showed how an RBF (aka – royalty based financing) investment pays off better, sooner, and with less risk. His humor and depth of knowledge on the topic merged into one of those rare presentations that was both fun and informative

View the complete slide deck either at Scribd, or Slideshare.

An animated intro to Revenue Based Finance

Filed under: news — Christian @ 10:44 am
Tags: , ,

This animation provides an introduction to revenue based finance, as practiced by superheroes. Seriously!

Yes, at RevenueLoan we approach things a little differently. If you think this kind of content is unusual from people that provide funding, you should see our newsletter

February 8, 2011

Build it, Ship it, Fund it.

Filed under: news — Christian @ 3:09 pm

Twelve months ago it was crazy talk. Like the dude with the scraggly beard on the corner raving about the coming apocalypse, if you told someone you could conceive, build, and launch a company in a few months, they would have backed slowly away from you and avoided making any sudden movements.

Six months ago the tech media picked up on the rapid-launch and scraped around for a few examples to showcase, “Hey! Look at these lunatics! They designed, built, and launched a company in a month!”

In the last month this method of starting a company has ceased to be newsworthy in the “edge media” most of us read. The mainstream media still doesn’t know what to do with the story, but then if it isn’t about Lady Gaga shagging some Republican Senator, the mainstream echo chamber can’t process it.

Now the roadmaps for how to do a rapid-launch yourself are appearing, and one of the best ones I have seen is (more…)

February 3, 2011

RBF is hot, and heating up in Texas

Filed under: news — Christian @ 1:54 pm

Our beloved financing model – royalty based financing or revenue based finance (take your pick) – is apparently now the “hottest new development in venture capital”, according to the Dallas – Fort Worth Tribune.

This article does a good job of illustrating most of the benefits of RBF funding over other traditional models (VCs, banks, etc), but glosses over one important aspect: Flexible monthly payments.

I know that with the whole fiasco surrounding adjustable rate mortgages, we have all become gun shy of the “flexible monthly payments” wording.

But when that flexibility is tied to your company’s revenues (and not to some arbitrary number invented by some Wall Street flunkie), that means the flexibility works in your favor. Slow sales over the holiday season? An unexpected rise in gas prices impacted your revenues? Weather didn’t cooperate, and people couldn’t get to your store?

Whatever the reason for the down turn in your revenues, your RevenueLoan isn’t going to put you out of business like a typical bank loan would. Because your monthly payment is pegged at a percentage of your revenues. So your revenues drop, then your monthly payment drops, too!

The up side on this is where things get really interesting, though. If your revenues go up, your payments go up as well, and you pay off your loan sooner!

This flexibility means that RBF loans are probably one of the last places where there is still real Win/Win scenarios in small business finance.

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