Tue. Sep 17th, 2019

Should you raise equity venture capital or revenue-based investing VC?

Source: https://techcrunch.com/2019/08/21/should-you-raise-equity-venture-capital-or-revenue-based-investing-vc/

Should you raise equity venture capital or revenue-based investing VC?

David Teten
Contributor

David Teten is a Venture Partner with HOF Capital. He was previously a Partner for 8 years with HOF Capital and ff Venture Capital. David writes regularly at teten.com and @dteten.

Most founders who are raising capital look first to traditional equity VCs. But should they? Or should they look to one of the new wave of revenue-based investors?

Revenue-based investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. RBI normally requires founders to pay back their investors with a fixed percentage of revenue until they have finished providing the investor with a fixed return on capital, which they agree upon in advance.

This guest post was written by David Teten, Venture Partner, HOF Capital. You can follow him at teten.com and @dteten. This is the 5th part of our series on Revenue-based investing VC that touches on:

From the founders’ point of view, the advantages of the RBI model are:

Source: https://techcrunch.com/2019/08/21/should-you-raise-equity-venture-capital-or-revenue-based-investing-vc/