November 17, 2022

Benefits of the Recurring Revenue-Based Financing Process

Benefits of the Recurring Revenue-Based Financing Process

Keka HR, the leading HR tech platform, raised $1.6 million non-dilutive growth capital through Recur Club, in 202, to fund its growth and customer acquisition. Recur Club proved to be a long-term growth partner for Keka as it helped unlock growth capital in just a few days without any collateral. Since then, Keka has grown exponentially and raised India’s largest series A SaaS funding of $57 million to enhance its offerings and strengthen customer support. 

To thrive and scale, you need the right type of capital infusion at the right time. However, not all funding options are made equal. Thus you must make the right choice by first understanding that your growth capital should enable you to grow and not burden you with investor requirements and loan EMIs. There are different kinds of funding available that you can choose based on the stage of your business, flexibility goals, and growth plans.

Recurring revenue-based financing (RRF) is a funding option that is becoming popular among SaaS businesses with a recurring revenue-based business model.

 

What is Recurring Revenue-Based Financing?

This type of financing provides a business with the capital it requires, which has to be returned to the financier as a fixed percentage of the revenue over time. It can be compared to a business loan, wherein your business’ future revenue serves as collateral for the loan. 

Recurring Revenue-Based Financing Benefits

Zero Collateral with Recurring Revenue-based payments

With RRF, you do not have to make any down payments or sign restrictive covenants before receiving the funding you require. Business owners do not have to pledge any property, asset, or guarantee. Predictable recurring revenue is seen as a sign of the good financial health of the company and is generally sufficient for secure RRF loans. 

Easy Approval

Whether you are applying for a loan from a bank, an angel investor, or a venture capitalist (VC), you are generally required to convince them that you have a sustainable, profitable business model. This might require you to fill out lengthy paperwork, answer long lists of Q&As, prepare presentations and attend conferences to persuade investors. RRF loan financing process is hassle-free and more accessible.

No Equity Dilution

VCs are a popular funding source for SaaS businesses looking to expand their markets or delve into new markets. However, it is a common practice for VCs to take control of 15% of the business ownership, or more, to finance your startup. Subsequently, the investors keep a close eye on business decisions and your ownership status shifts. 

There is added pressure to perform with every business decision that is made, and your focus may waiver from keeping the investors content rather than growing the business. With RRF, on the other hand, there is no dilution, and you retain full ownership of your company.

Retain Business Control

RRF allows you to maintain control of your business decisions without requiring accountability to investors. It enables you to make business decisions based on what you feel is best for your company. True growth can be achieved when founders are able to align their actions with their vision.

Easy Repayments

Repayment of an RRF loan is not a fixed amount at regular intervals, unlike most business loans. It is usually a percentage of your company’s revenue over a given period until a predetermined multiple of the capital is repaid. This accounts for market volatility and ensures you don’t have to worry about meeting a target even during underperforming periods.

Since early-stage businesses have quite a bit to deal with, paying back a fixed monthly payment may not be feasible for all business owners. In the case of RRF, since you only have to pay a percentage of your total monthly revenue, you can focus on growing the business rather than meeting the monthly payback amount.

Why should you opt for Recurring Revenue-based financing with Recur Club?

Founders looking to finance their business quickly and with total transparency can sign up with Recur Club. Companies with annual recurring revenue of 1 crore (10 million) or more or a runway of more than three months are eligible for RRF with us.

Recur Club’s AI-powered technology eliminates the time-consuming paperwork and saves you from making presentations, attending conferences, and making management calls when applying for funding from other sources. The software ensures that the diligence process takes only a few minutes and digital onboarding makes the financing process fast. 

Once your funding is approved, Recur Club ensures that the amount is transferred to your bank account within 48 hours of onboarding. With VCs and angel investors, this process can otherwise take up to several months. 

With Recur Club, we provide founders with benefits beyond just funding. You get access to our broad network of mentors and thought-leaders who can share valuable insights on marketing, logistics and guidance on tackling hurdles in company growth. We also provide access to business intelligence and optimization tools to help you evaluate your company’s growth and performance.

Sign up with Recur Club today to finance up to 50% of your annual recurring revenue in less than 48 hours.