Business View Magazine | December 2019

17 BUSINESS VIEW MAGAZINE DECEMBER 2019 A fter several decades of very little change in the world of entrepreneurial finance, the past several years have seen the emergence of a number of new approaches to how small businesses fund their growth. While legacy solutions like equity-sales, factoring and SBA term loans certainly work well for a wide range of companies, there is a new wave of more creative growth funding solutions that are helping small business owners access the funding they need to take their companies to the next level. One of the most company-friendly small business funding solutions that made a recent splash is revenue-based financing. Revenue- based funding is as simple and elegant as it Growth-stage companies are increasing revenues without the use of equity funding sounds. Rather than sell a stake to an equity investor or get tied up in debt covenants and personal guarantees with a traditional loan, revenue-based financing allows a company to secure a large chunk of growth capital upfront and then repay the investment from a small, fixed percentage of future revenue over a three to five-year timeline. By utilizing a repayment model tied to future revenues, business owners can access funding by selling a fixed portion of their future revenues in an approach very similar to providing a royalty to an investor. While revenue-based financing still remains somewhat of an undiscovered secret, the market is quickly taking notice. In Q2 2019, Lighter Capital released a report confirming