Suppose your company already generates revenue, yet you cannot access financing in traditional institutions (lack of credit history or requirement of burdensome personal guarantees, for example) and are unwilling to give up equity. In that case, revenue-based private funding is your best alternative.
Revenue-based funding consists of investments similar to a loan, but no fixed payment schedule exists. Instead, the company pays a fixed percentage of its revenue. In months of no income, there is no payment. This lets the loanee pay at its own pace, without incurring the risk of looking for another financing and eventually bankrupting by not being able to pay for it.
In Friday Finance, we have a partnership with the British company Uncapped. A leader in its sector, it provides funding from Є100k to Є10M, low flat fees with no interest rates and, most importantly, transparency. You are aware of the total value from the start, and, again, you only pay when your business can.
Our partners from Uncapped give Friday Finance users special treatment. Their requests are prioritized and dealt with expeditiously.
Why and Where to Seek Financing
Whether for expanding their operations, paying salaries, investing in new products or balancing their finances, there are numerous reasons companies seek funding. Situations like those are observable in every stage of a company, from startups to mature businesses, during growth or turnaround periods.
In the past, financing was an activity dominated by banks and traditional investment associations. Those are still vital players nowadays – FC Barcelona’s new stadium project will be conducted in association with Goldman Sachs. Fortunately, there are alternatives for less prominent but equally hungry organizations: private funding.
Private funding is superior to traditional institutions-backed financing for three main reasons:
- Faster turnaround time: for usually being online and less bureaucratic, private sources provide funding more quickly than traditional financial institutions. This is especially important for companies that need money to take advantage of time-sensitive opportunities or meet urgent needs.
- More flexibility: private funding sources are more willing to provide customized or flexible solutions, which can benefit companies that do not meet the requirements for traditional financing.
- Fewer requirements: private funding sources have fewer requirements, such as collateral or a proven track record, making them more accessible for companies that are just starting or have limited resources.
Advantages of Getting Financed
Seeking funds is not as short-sighted as just hiring Robert Lewandoski for your front three (and by no means this is Barcelona’s final goal). The underlying advantage is the immense boost your company can have after this initial push in the most diverse sectors.
Dealing in a sector as risky as biotech, Moderna would naturally have a hard time seeking money from traditional investors. After the company managed to get their first round of investment, it focused on its product. It developed an RNA-based vaccine which was pivotal to the combat of the coronavirus pandemic in 2020. The company allegedly grew its revenue by over 2000% from 2020 to 2021.
For distinct reasons, evidently, startups are considered risky investments too, and face challenges when looking for traditional financing. When it was still called ZenPayroll, Gusto received private financing in their October 2012 $6M seed round. Fast forward ten years, and in 2021 the company raised $230 million in their Series-E round and extension round and was valued at around $10B by that time.
If you see your company somewhere in the stories told here and are interested in private capital funding, apply in your Friday Finance workspace and start growing right now.
