Comments for RBF Central

Comment on Revenue-Based Finance: truly different, but when is it better? by rlucas

rlucas — Wed, 19 Oct 2011 15:43:14 +0000

Tim, I’ll agree and add another — you also want to solve for the risk of financial distress / insolvency. I suspect a bias toward avoiding that is at play in the preference of many entrepreneurs for equity dollars. RBF, or other creative forms of repayment over time, can mitigate that risk.

Comment on Revenue-Based Finance: truly different, but when is it better? by venturedebt

venturedebt — Wed, 19 Oct 2011 12:43:25 +0000

This is a thoughtful post and stream of questions. I’m looking forward to seeing how this evolves over time. BTW, cost doesn’t equal the lender’s IRR or an implicit interest rate – that’s looking at it from the lender’s perspective. The only way to calculate the cost of a debt deal is to look at an exit analysis with the debt and without. You can sensitize this for several scenarios but you’re not solving for an interest rate, you are solving for the amount of exit proceeds for the stakeholders.

Comment on Revenue-Based Finance: truly different, but when is it better? by rlucas

rlucas — Fri, 14 Oct 2011 19:16:44 +0000

Mark, good question. It depends on the way it’s “papered.” Most RBF investors I know of, like Lighter Capital, use a “debt-like” structure in which case it’s carried as long-term debt on the B/S and allocated to interest expense on the P&L.

Some investors use a preferred-stock based buyback or dividend approach, which would of course be in equity on the B/S and post-tax on P&L.

Still others use a royalty/IP licensing scheme that stays off-balance sheet but comes out contra gross income on the P&L.

Comment on Revenue-Based Finance: truly different, but when is it better? by MarkC

MarkC — Thu, 13 Oct 2011 20:19:08 +0000

How is RBF reflected on the balance sheet and income statement say for the following RBF structure: $50K investment, 2% royalty on gross margin payable quarterly, annual cap at $30K, lifetime cap at $300K.

Comment on Risk of Revenue-Based Finance vs Equity and Debt by RCA Inaugural Conference 2011 | Revenue Capital Association RCA Inaugural Conference 2011 |

Thu, 08 Sep 2011 18:14:57 +0000

[...] Lucas: Risks of Revue-Based Finance vs Equity and Debt Read on RBF Centeral Learn more about RBF [...]

Comment on Risk of Revenue-Based Finance vs Equity and Debt by Lief Storer

Lief Storer — Sat, 27 Aug 2011 18:58:53 +0000

Our company (Boombotix) is looking at revenue based financing right now. It seemed like a logical choice for us seeing as commercial lending seems to have tightened up at the banks and equity investment has shifted heavily into software/tech versus consumer products. Does anyone know any firmst that like to work with $.5-1 million companies?

Comment on Revenue-Based Finance: What Would Google Do? by Giuseppe

Giuseppe — Tue, 01 Mar 2011 10:52:17 +0000

Thanks for your answer. I am searching for data from startups adopted RBF at the aim of better assessing the legal implications that RBF entails (it is for my LL.M. thesis), but I have to admit it is very difficult to find such informations, unless I start to pick them up from the single startups: a job extremely tough! Do you have any suggestion? Any database I can rely on?

Comment on Revenue-Based Finance: What Would Google Do? by tthurston

tthurston — Mon, 28 Feb 2011 17:44:27 +0000

Sorry that’s my bad. Mike did a helpful job of spotting a decimal mistake that I went in and corrected just about 10 min ago. It’s correct now. Thanks for the help Mike!

Comment on Revenue-Based Finance: What Would Google Do? by rlucas

rlucas — Mon, 28 Feb 2011 17:24:23 +0000

Really? $25,000,000, the highest labeled point on the Y axis, is $25 million. The title indicates values are in thousands. $25 thousand million is $25 billion. Or am I missing something here?

Comment on Revenue-Based Finance: What Would Google Do? by Mike

Mike — Mon, 28 Feb 2011 10:09:10 +0000

Your chart says that Google makes trillions….