What is Revenue-Based Financing (RBF)?

The right financing solution for digital companies

The Revenue-Based Financing, can literally be translated as "revenue-based financing". In practice, RBF is an innovative financing method that allows a company to obtain funds in 24 to 48 hours, without dilution.

You've probably already heard that "cash flow is the lifeblood of any business". And if you run a business yourself, particularly an online one (Ecommerce operation, SaaS company, etc.), you know this better than anyone.

Of course, to increase your cash flow and to be able to accelerate your activity, financing solutions exist. However, they are not very suitable for online businesses, as you may have already experienced (we salute your banker!).

This is where a new financing solution comes in, created by entrepreneurs for entrepreneurs: Revenue-Based Financing. That's what this article is all about, enjoy your reading!

Why are traditional financing methods not suitable for your online business?

Traditional methods are not always suitable for online businesses

As mentioned in the introduction, online businesses are currently poorly served by traditional financing methods. It is difficult to find a suitable solution for your online business.

  • Bank credit

If you’ve ever asked your banker for a loan to “finance your online acquisition campaigns” for example, he likely made a strange face. Banks mainly finance assets (such as physical shops); they are more cautious when it comes to intangible assets. Moreover, to obtain a professional bank loan, you need a lot of guarantees.

  • Fundraising

The other traditional way of financing is to find investors willing to finance your business. This is no easy task, especially as not all businesses are suited to this method of financing. Even if your business is on the radar of an investment fund, raising equity is a time-consuming and complex process that will cost you a lot of capital.

How can you finance your online business, then?

Your online business falls through the cracks of these financing methods. How can you accelerate your business without benefiting from them? There is an alternative: Revenue-Based Financing. Read on to find out all about it.

NB: nothing is definitive! Having obtained initial financing can help to secure a second round of equity financing, for example (the points about the time required for the process and the dilutive aspect remain, however, relevant).

The Revenue-Based Financing, a new financing method adapted to e-commerce and SaaS companies

Still confidential in France, Revenue-Based Financing is a great success in North America. Major companies have been offering it to their merchants for several years (Amazon, Square, Stripe) and companies have specialised in this method of financing. What is it?

The Revenue-Based Financing in a few words

Revenue-Based Financing is sometimes also called royalty-based financing. In practice, RBF is an innovative form of financing that enables a company to obtain funds within 24 to 48 hours, without dilution. Repayment is made according to revenue.

Too good to be true? Not at all, we'll explain how it works in detail right away.

How does Revenue-Based Financing work?

  1. The financing company asks you to connect your accounts to its tool to check your eligibility (advertising accounts for an Ecommerce business for example, bank accounts, etc.). The algorithms do their job and accurately assess the company's situation, performance and scalability.
  2. If you are eligible, the company releases the funds and you receive them within 24 to 48 hours. It doesn't get much faster than that!
  3. After a few months, you have to start repaying the funds obtained. The amount of your monthly payment will be calculated according to your performance during the month; it’s not fixed like a traditional bank loan. This offers greater flexibility and allows you to adapt as closely as possible to your activity.
  4. And how much does it cost? Of course, there is a fee: the company that finances you via RBF takes a commission, which generally varies between 6 and 9% of the amount financed, and that's it. No dilution, you remain the sole owner of your company!

Silvr, pioneer of RBF in France

Are you currently looking for financing for your online business, but don't know who to turn to? Silvr is the first company to offer this type of financing in France.

Silvr, by entrepreneurs, for entrepreneurs

Nima and Grégory, our co-founders, were already entrepreneurs before creating Silvr. They were both confronted with the infamous problem of financing online businesses and decided to tackle it. And from there, Silvr was born, a company created by entrepreneurs for entrepreneurs, to support them in their growth.

What activities do we fund with Revenue-Based Financing ?

Today, we fund two types of activity through the RBF:

  • Ecommerce: One of the key levers for growing your Ecommerce business is customer acquisition. That's why we offer to finance your advertising campaigns in order to boost your sales, while maintaining your cash flow.

How does it work? Answer in images:

Silvr for e-tailers
  • SaaS Because it is sometimes necessary to obtain immediate cash flow, Silvr offers you to transform your monthly subscriptions into annual cash flow, in 24 hours.

How does it work? Answer in images:

Silvr for SaaS

At Silvr, we have already financed more than fifty e-tailers and SaaS companies, for a total amount of several million Euros. Our clients talk about it in even more glowing terms that we do!

The Revenue-Based Financing is already the main alternative to fundraising in North America. In France, this innovative financing method is gaining momentum to support online businesses in their development. Flexible, fast and without diluting your capital, it allows you to take your company to its next stage of growth with ease.

Published on

March 9, 2023

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