Dispelling Myths about Revenue-Based Financing

By Nick Macey

Many entrepreneurs are not familiar with Revenue-Based Financing (RBF). RBF is a great alternative financing option for early-stage companies. GSD Capitals’s specific blend of RBF is especially entrepreneur friendly, allowing entrepreneurs to keep control over their business while getting flexible growth capital to support their growth.

Talking to entrepreneurs, we hear quite a few myths about RBF – starting now, and over the next few posts, we’ll cover the top myths about RBF that we hear most frequently. Here’s a quick rundown of where we’ll start:

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  • RBF is too expensive. We hear this one quite frequently – and it’s just not the case. When compared with most equity scenarios, RBF is a lower cost of capital, and compared to traditional debt, you aren’t required to put your personal finances on the line.
  • RBF makes raising future equity financing more difficult. This isn’t true either – RBF provides great flexibility in the early stages of your business. It doesn’t provide pressure to exit (sell the business). It also doesn’t preempt equity at all – as a matter of fact, we believe it can help make you a prime venture capital candidate.
  • RBF and equity financing can’t happen at the same time. Equity and RBF can definitely, and often do play well together in the same financing round to help lower your cost of capital. We have an example to share here as well. In this post, we’ll get you asking instead, why am I being told that they can’t go together?
[/list] What questions do you have about RBF? What concerns do you have that we can help you understand? We’re looking forward to your thoughts and feedback along the way as we explore common RBF myths.

Stay tuned and learn a bit more about the founder-friendly realities of RBF!

  • Casey Hunsaker

    Very interesting! Great post!

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  • Ribel_Anderson

    I was not even familiar with Revenue Based Financing (RBF) few months ago.One of my entrepreneur friend took the advantage of RBF & discovered the dramatic changes of his organization.I was wondering & asked for the hidden mystery to my friend.At last,he suggested me the site of Rock & Hammer.

    Now it seems really interesting.It really works.Definitely I’m looking forward.

    Thank you friend,Thank you Rock & Hammer.

  • Chris

    Thanks for clearing this up as I have to say I really know little about RBF.