The Added Value of An RBF Investment Partner
By:
Bella Gangnes
If you are a diverse-led entrepreneur looking for a financial partner, consider finding one who brings more to the table than a financial investment. Look at these different funding options and see why a Revenue Based Financing (RBF) investment partner adds more value to your business than simply funds.
Friends and Family
You started your company with backing from friends and family who, in most cases, have little entrepreneurial experience. They want to encourage you, but as time passes without a return, they may not prove very understanding, and their advice may not make sense. Do you really want to ask for a second round of financing and risk the cold shoulder at holiday gatherings?
Standard Business Loans
Banks will loan you money at interest if you have a good credit rating. But as a diverse-led business, you may find big banks making excuses not to work with you. That small neighborhood bank on the corner with little competition may charge higher rates. In both cases you risk serving up personal property as collateral. Clearly the bank’s interest in you is purely financial.
Angel Investors
These high-net-worth individuals invest their own money in new and growing businesses. Some of these investors may have experience in your industry. Others may offer some mentoring value. But how do you find the right partner with everything you need – financial stability, business experience, industry knowledge, and the talent to mentor you? As a minority business owner there’s a good chance you do not have these individuals in your network.
Venture Capital (VC)
VCs invest money others have contributed to a fund. While a VC can contribute a larger amount of money than an angel investor, the venture capital company may also want a bigger piece of the action. Unlike a simple business loan, venture capital funds literally buy a stake in your business. And the VC’s goals for your business may differ from yours.
Private Equity
Private Equity operates like a VC but makes an investment in companies further along than start-ups. They typically take a large percentage of ownership, allowing them to influence the hiring and firing of executives, make significant changes in a business, and assume the power to sell the company.
RBF Investors
In Revenue Based Financing funding is based on predictable revenues. Investors loan funds and agree to take a percentage of monthly gross revenues until they receive an agreed-upon pay back amount. The loan is guaranteed by recurring revenues, and the investor takes no stake in the company. You maintain control!
In addition, an RBF investor with experience in your industry becomes a valuable mentor. From the outset of your relationship, the investor’s goals align with yours. You both want positive, increasing revenues. A knowledgeable RBF investor adds value by mentoring you through key decisions, helping you determine how to invest the funds in your business to encourage future growth.
As a diverse-led or minority-led enterprise, look for a Revenue Based Financing (RBF) investment partner who adds value without taking an equity stake. Contact Founders First Capital Partners to connect with an RBF investor whose goals align with yours and who can help you take your business to the next level.
