Get financing from my recurring revenue

For Start-ups

Venture Capital

In France, there are more than 300 investment funds. These are professional shareholders who take an equity stake in companies that are generally not listed on the stock exchange. In addition to the financial contribution, the VCs participate in the definition of a clear and long-term strategy for the company. 

It can be to finance start-ups or to support small businesses that want to grow but do not have access to equity markets.

Venture capital ists typically look for companies with strong ARR (Annual Recurring Revenue) with a team and a strong market potential. They also look for opportunities in sectors they are familiar with. Beware, this method of financing is dilutive unlike Revenue Based Financing (RBF) for example. 

Subprime debt products

Subprime debt products are typically high-risk, high-yield debt facilities, such as term loans or convertible loans. Subprime debt providers do not initially take equity - although convertible loans can be converted to equity if the repayment schedule is not met. For this reason, these products are complementary to venture capital. 

Venture debt is typically given to start-up companies that are not yet profitable. It can be a way to finance your growth. However, interest rates are usually high. 

Incubators

Business incubators are structures that support business creation projects. An incubator generally provides support for accommodation, training, advice and financing during the first stages of the company's life. Two types of incubators can be distinguished:non-profit and private incubators.

The majority of incubators are non-profit structures linked to public or semi-public organizations. They can be incubators linked to public research or schools. Private incubators are driven by a desire for profitability. They generally take a percentage of the capital of the company they support in order to realize a capital gain when the company is acquired or floated on the stock market.

Incubators generally look for start-ups with recurring revenues to ensure the viability of the project. A strong, stable MRO is an opportunity to obtain funding through an incubator. 

Start-up gas pedal 

Unlike incubators, startup gas pedals accept young companies into their facilities on a step-by-step basis. They typically focus on small teams of developers, not founders. Seed capital is provided in exchange for a share of equity. Startups in the gas pedal receive advice, training, and mentoring until the last day of the program, the demo day (when the startup pitches to investors). 

Your recurring revenues are a guarantee of quality for gas pedals. It will allow you to finance your growth and join a gas pedal that is rich in advice and networks. 

Business Angels

A business angel is an individual who invests in the capital of a company at an early stage of creation. It is important to choose your business angels carefully because they will make their skills, experience, networks and part of their time available to support you.

These types of investments are risky and typically represent no more than 10% of the angel investor's portfolio. Angel investors, on the other hand, focus on helping startups take their first steps and get funded, especially for those with promising early MRR.

For scale-ups

Private equity

Private equity is an alternative investment category and consists of capital that is not listed on a public exchange. The capital can therefore be used to finance new technologies, make acquisitions, increase working capital, support and strengthen a balance sheet. PE funds look particularly at the revenues and metrics such as MRR orARR of the scale-ups they can invest in. 

Private equity offers several advantages to companies and start-ups. It is favored by companies because it provides access to liquidity as an alternative to traditional financial mechanisms, such as high-interest bank loans or public market listings.

Revenue-Based Financing

Revenue-Based Financing is a new method of financing based on thecompany's future revenues.This type of financing makes it possible to transform future recurring revenues into immediate cash.

FBR is a type of financing that does not require investors or additional equity dilution. It is a model that allows lenders to finance a business based on its revenues and collect payments based on receivables and incoming payments.

Karmen is a revenue-based financing solution for businesses with recurring revenues seeking short-term financing.

In less than 48 hours, Karmen can release funds to finance projects, customer acquisition costs, or generate cash, all of which can relieve your working capital and, by extension, your cash flow.

In addition to this speed of execution, recurring revenue-based financing is a non-dilutive and more accessible financing solution.

Karmen offers a fast, non-dilutive and transparent solution to stay in control of your business!

Recurring Revenue Financing

Recurring revenue financing(RRF) is a way for companies to raise capital by selling their monthly or quarterly receivables related to their customers' subscriptions. This differentiates it from regular revenue-based financing (RBF), as RRF requires the company to actually sell future receivables, whereas RBF payments simply take a percentage of incoming cash flow. 

The payment amount in an RBF structure fluctuates according to fluctuations in incoming cash flows. In contrast, in an RRF structure, payments always consist of a fixed amount because they are tied to and accrue from subscriptions purchased.

The RRF is a good way to finance itself through recurring revenues.

Merchant cash advance

A merchant cash advance, sometimes referred to as a Merchant Cash Advance (MCA), is a lump sum that a business (called a merchant cash advance lender) receives from a merchant cash advance company, in the form of a deposit or payment into the business's current account. The MCA is a way to finance yourself from your existing income. The MCA is not a micro-loan.

In exchange, the business owner or merchant agrees to pay a percentage of future sales (debit or credit card sales) until the cash advance is repaid. 

The discount rate or repayment period is either daily repayments or weekly payments. Your company sells its future credit card receivables at a discounted price. The result is that the repayment terms are "factored" and are not considered interest. Therefore, technically, it is not a loan. Hence the name "cash advance" and not cash advance loan. 

Bank loans

The bank loan is a financing solution widely used by business creators. However, a bank is a company and like any company, it seeks to minimize its risk and optimize its profitability.

To obtain a bank loan, it is therefore necessary to be well prepared to present your project to your banker. It can be difficult for young companies to provide sufficient guarantees in terms of potential market and viability. Thus, revenues linked to subscription or subscription are reliable and reassuring guarantees for bank loans and will allow you to finance your needs. 

To learn more, check out our article on why your banker doesn't understand your business. 

For more mature companies 

Banks - Medium risk products 

Outside of industry-specific banking products such as SaaS financing, there is still a market for mainstream banking products such as business loans, lines of credit or revolving credit. 

Most companies that are able and willing to attract regular bank financing are mature companies with a stable growth rate. Since these companies already have a good track record and proven profitability, banks are more willing to offer lower risk products. These include loans and lines of credit at normal rates, with collateral.

IPO

For many profitable SaaS companies, going public is the ultimate goal. An IPO is rewarded with more capital than can be attracted with most other solutions, and results in an exit for shareholders (and often the team - after the agreed-upon employment term). 

The number of SaaS companies that have gone public has increased in recent years. 

Typically, companies opt for an IPO when they are growing, profitable, and performing well in major SaaS benchmarks . IPOs create a lot of cash and, with proper valuation, limit further dilution for existing shareholders. 

With the many options available on the market, it can be difficult to distinguish one financial product from another. The most important factor to consider when looking for financing options is the maturity of your business and the course of action you want to take.