Alternative Financing: The Future of Fundraising in 2023
January 24, 2023
In today's startup ecosystem, there are innumerable options available for companies to raise capital and fund their growth. While traditional methods such as venture capital are the norm, there has been a steep rise in various alternative financing options in recent years. Alternative financing refers to any type of funding that falls outside of equity financing or traditional debt, and can include options such as crowdfunding, peer-to-peer lending, and invoice financing.
Here is a quick overview of how your ownership moves in VC funding vis-a-vis VC funding complemented with alternative financing options.
Alternative financing provides businesses with access to capital that may not be available through traditional channels, and can be a great option for companies that may not qualify for traditional loans or are looking for more flexible financing solutions. In this blog, Recur Club explores the varied options for alternative financing floating in the market and which is the best bet for your business.
Zooming In On Alternative Financial Options
Financial Barriers to Entry
Most businesses, especially early- stage startups have limited access to traditional financing. VC funding and debt is a long-shot for these smaller businesses. AF opens up new avenues of fresh capital for startups that have the capability to grow but haven’t been able to secure VC funds or debt from the market.
In times of business emergencies – disruption is supply chains, unforeseen overhead costs or any other contingency depending on the nature of the business, start-ups must keep multiple sources of financing at an arm’s length. For securing additional, dilution-free funds within 48 hours - alternative financing is the smartest option in the market. It not only helps cover these unforeseen expenses but also allows your business to acquire these funds faster than traditional financing options.
Lack of Collateral
Most early stage-startups are asset light and do not have the option to acquire debt against collateral. The traditional debt is not only expensive but also inaccessible to new age businesses. This is where recur club financing – one of the most sought after financing options comes to the rescue. Recur Club financing is not only collateral- free but is also dilution-free. Let’s look at all the benefits that come with such an option.
Benefits of Alternative Financing
This is where recurring revenue financing – one of the most sought after financing options comes to the rescue. Recurring revenue financing is not only collateral-free but is also dilution-free and has the least cost of borrowing.
Alternative financing is nothing short of a boon for early age businesses. There are countless advantages for picking alternative financing options, some of them are as follows :
Seamlessness:Faster application and approval process in alternative financing shortens the time for the funds to hit your bank vis-à-vis a traditional financing option Easily Accessible: With lower barriers to entry, it is readily accessible to new age business that don’t make the cut for traditional debt
Dilution- free funding: Acts as a catalyst in securing the much-needed funding for businesses that are unable to secure traditional financing or don’t want to dilute their cap-table
Discover Future of Financing with Recur Club Financing
Recur Club Financing is one such means of alternative financing that allows you to leverage your recurring revenue streams for non-dilutive upfront growth capital. RCF works for companies with recurring revenue streams, i.e. organisations that charge customers on a monthly or quarterly basis.
Our unique approach focuses on helping you convert your recurring revenue streams into upfront capital. If you’re thinking of non-dilutive funding, Recur Club provides a flexible, quick way to get the cash flow boost you need for your business.
Our goal is to help asset light companies with recurring revenue streams by providing them with a flexible financing option. This gives them the space and liberty to grow on their own terms, as we believe founders know what’s best for their company.
With Recur, founders can finance their business quickly and with complete transparency. Sign up on the platform and check how much non-dilutive funding they qualify for.
With Recur Club you have access to :
- Cash in the bank within 48 hrs.
- Up-to 50% of your ARR
- No Dilution
- No Restrictive Financial Covenants
Recur Club Vs Venture Debt
Recur Club Vs Revenue Based Financing
Recur Club financing is based on a company's recurring revenue streams, such as subscription fees or monthly contracts, with fixed monthly repayments,. Meanwhile, revenue-based financing is based on a company's overall revenue, including one-time sales and non-recurring revenue streams, and is typically repaid as a percentage of that overall revenue. Revenue based financing is more appropriate for D2C businesses looking to fund their marketing expenses.
Why is Recurring Revenue Financing a better option for businesses?
Accelerates Growth :
Revenue based financing penalises growth by increasing the amount of repayment based on the revenue of the company. ie, when your revenue increases your repayment frequency increases as well. Meanwhile, RCF lets you focus on growth by offering predictable and stable cash flow with lower interest rates.
Founder Focused Financing:
Revenue based financing usually takes around 25% - 30% in interest by increasing the amount of repayment when your revenue grows and eats up a large portion of your revenue. Recur Club, on the other hand, offers 8% - 12% upfront discount while disbursing the funds to their customers. It relieves a great amount of focus from funding and allows the founder to focus on building the start-up.
Seamless transfer of funds:
With Revenue based financing you get around 15% of your ARR and the process is time consuming which usually takes at least a week or even more than that in some cases. While Recur Club Financing provides you up-to 50% of your ARR in just 48 hrs without covenants.
#DitchThePitch with Recur Club
Rather than trying to convince investors or lenders to believe in your business idea, Recur Financing allows you to secure funding based on the predictable and steady stream of income from your recurring revenue. This allows you to focus on growing and expanding your business, without the added stress of constantly seeking out and pitching to potential investors.
Our AI-powered underwriting eliminates the time-consuming paperwork. The software ensures that the diligence process is completed within minutes.
Not only do we make the process seamless but we also extend access to our invaluable network of mentors and thought leaders. These mentors share industry-specific advice for your business. We also help track your growth via sharp business intelligence and optimisation tools.
If you would like to know more about recurring revenue financing, please feel free to explore our other blog on the website