It can also be a great tool to use in addition to equity financing. And unlike a weeks or months-long due diligence process for a loan or equity round, the algorithm can assess your live data in real time.įor businesses with recurring revenue streams, this is a flexible way to finance growth when VC and loans aren’t an ideal or accessible option. Investors use that risk level to bid anonymously on your future revenue, which allows you to get the most capital and the lowest cost. Through live data connections, RRF evaluates your recurring revenue streams to determine their risk level. Recurring revenue financing treats your revenue as a tradable asset, which you then sell to investors.īy selling future revenue streams to investors for up-front capital, they get a steady return and you get to grow faster based on your already booked revenue, taking advantage of big opportunities and the time value of that capital as you scale. A loan based on your revenue is still a loan tied to policy-driven interest rate changes. Recurring revenue financing (RRF) isn’t just a new package for lending, it’s a whole new model for financing a company, and that’s crucial. You can even sell the promise of payment with interest to a lender, but you’ll probably have to accept higher rates, restrictive covenants and possibly warrants to outsell the other debt they can buy.īut your revenue is the one asset you can sell that gives the predictable, stable, de-risked returns investors are looking for in a market full of uncertainty. You can sell a piece of your company to a VC, but in a down market, it’s going to be worth less than it should be (and less than it might be in six to 12 months). The trick is to sell something investors really want. Harry Hurst is the co-founder and co-CEO of Pipe.Īs the saying goes, “Everyone is selling something.” Sometimes, we forget that when it comes to fundraising.
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