Use other funding to drive VC growth without undermining ownership - TechCrunch

Use other funding to drive VC growth without undermining ownership

Business launch difficult enough, but even harder to scale to a successful and rewarding exit. Getting early enterprise funding is usually the best way to accelerate and sustain growth, but with different funding options available, how do you find the best approach? What is the best alternative to VC, and at what point in your company 's growth do other sources of funding make sense?

Choosing the right funding partner can be difficult, as they must be in line with your mission, values ​​and goals. Another thing, you will be involved in a relationship that is not in line with your goals and may end up with a lower than expected property.

Here's a summary of how other funding came about, how it can benefit high - end SaaS beginners and how to find out if it's right for you.

Index

    Development of other funding

    There is a shortage of unsustainable financing options for growth, recycling revenue businesses. We have found that traditional sources of debt capital (such as banks) prefer to give debt to asset - laden businesses where collateral can be secured.

    Every dollar sitting in a savings account or traditional short-term debt / liquidity instrument is subject to a real loss in value as inflation goes up.

    When it comes to SaaS or light-asset business models, there is only an asset base to align, which makes traditional debt providers uncomfortable. Furthermore, while membership or recurring income business models are not technically new, they have received little support. SaaS companies can often only look to traditional banks for post - profit financing and / or institutional venture capital support.

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    This approach is based on pragmatic rules, but it leads to a large market gap for early stage companies that have been fit for the product market and a real revenue draw. If they do not fit the “checklist,” they will simply be thrown into the background until all the boxes are turned off, regardless of the draw.

    Income funding

    Revenue funding allows founders to have more control over their decisions without affecting board seats. SaaS companies can particularly benefit from this model, as it promotes future revenue from already registered customers.

    Revenue financing allows companies on a healthy growth path to instantly gain access to future cash flows from their customers ’monthly payments. Another benefit is that the borrowers' credit limits can change according to their expected monthly growth, and they can withdraw money when needed.

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