How does Revenue Based Financing (RBF) work?

How does Revenue Based Financing work? The 3 key steps

RBF or Revenue Based Financing is financing based on the future revenues of your business. It is a type of non-dilutive financing (there is no transfer of capital in exchange) where investors provide financing in exchange for a certain percentage of the future gross revenues of your company.

It isan alternative investment to more conventional equity investments such as venture capital and business angel investment or debt. 

It has many advantages, including fast (less than 48 hours at Karmen), non-dilutive and transparent financing. These are the three principles of this solution that allows companies to advance their revenues. 

The RBF is designed to boost your cash flow. What's more, it is totally adaptable because the repayment is calculated according to your turnover.

Test your eligibility 

Once your eligibility has been tested, our teams will get back to you within 48 hours to give you feedback on your funding possibilities. The eligibility criteria are as follows: 

• 9 months of commercial activity ;
• 300,000 in sales;
• company or entity based in France.

To be eligible for our funding, you must meet these criteria. Then, during our analysis, we perform a scoring. Our algorithm takes into consideration many factors indicated by your connected accounts such as MRR growth, churn and net retention rate, cash position, burn etc.

If your expected income is high enough, you will receive a financing offer with different repayment conditions. 

🚀 To test your eligibility, click here.

Register on the platform

To start your journey towards RBF funding, register with Karmen and request an analysis of your data to see if you qualify. Registration is free and only takes a few minutes. Your application for funding will then be reviewed within 48 hours.

This will allow you to connect your financial accounts. We integrate APIs to analyse your income and data. It's a quick and easy integration so no time is wasted on paperwork and financial paperwork. 

In order to analyse your file we need you to connect your 

• Billing tools via Stripe, Gocardless, Chargebee...
• Bank accounts via Société Générale, BNP, Crédit Mutuel or Qonto...
• Accounting via Pennylane, Sage or QuickBooks...
• Marketing accounts via Hubspot, Salesforce, Google Ads or Facebook Ads. 

All the documents and data you share with us are secured and encrypted to respect the secrecy and confidentiality of your data. 

You have the possibility to sign a confidentiality agreement directly from the platform when you register.

Repaying your financing

The terms of repayment are set out in advance in your financing proposal by a repayment schedule. Repayments are made as a percentage of the monthly income generated, which therefore usually fluctuates.

So if your turnover is higher than expected, you will be able to repay your loan more quickly. Conversely, if you have more difficult or slow months, repayment will be slowed down so as not to cause cash flow problems. 

How much does FBR cost?

There is no fee for registration. Registration and application for funding are free. There are no application fees! Once your business model and revenues have been analyzed, Karmen offers you fast, flexible financing, without personal guarantees and above all without dilution! 

In exchange, we offer a fixed fee on the loans granted. It depends on the risk analysis and the duration of the loan. It can vary between 4% and 10%. 

The reimbursement is made monthly and according to your generated turnover.

At Karmen, we adapt to your availability. The amount of the monthly payment is calculated according to the month's performance, unlike a traditional bank loan which is fixed.

Karmen does not take any share in your equity. This is the essence of non-dilutive financing. This means you retain full control of your company. This is usually a crucial issue for startups that have the potential to grow rapidly but need an injection of funds to help them get there. 

Non-dilutive financing will add to cash flow, whereas dilutive financing reduces the control of your company's current shareholders, its profitability or its earnings per share.

What's more, you don't have to put up any personal guarantee. You do not need to present a personal guarantee for the loan, and you thus reduce your own risk compared to a traditional loan. 

RBF for which companies? 

The RBF as its name indicates is dedicated to digital companies. They must be on a good growth dynamic to meet the eligibility criteria. Among the digital companies, we can count SaaS software publishers, subscription companies, D2C brands, service companies and many others. 

With Karmen, access non-dilutive and transparent financing to fund your growth quickly and easily.

However, it is important to remember that RBF financing does not replace bank loans in certain situations. If your company is looking for very long term support, to buy back debt or to make very long term investments, RBF, which remains a short term financing (6 to 12 months), will not be the most adapted to your needs. 

However, if you are a start-up company struggling to find traditional financing because your company is young and you do not have traditional assets such as inventory, stock, plant or machinery, then RBF may be a solution for you!

How does Revenue Based Financing work at Karmen? 

Karmen is a non-dilutive funding solution that helps digital businesses access instant growth capital. Instead of waiting for online or subscription revenues to be collected month after month, Karmen unlocks the annual value of those revenues, up front. Karmen's solution allows digital businesses to access instant growth capital, within 48 hours, to fund their growth expenses (customer acquisition, marketing, recruiting, technology and more). 

For start-ups, we are often their first source of growth capital to help them accelerate before raising funds. 

For venture-backed companies, we provide an additional source of non-dilutive, founder-friendly capital to help entrepreneurs achieve their growth objectives, while retaining ownership of their company. 

At Karmen, we help your business apply for non-dilutive financing in an amount commensurate with your company's annual turnover. We preserve your capital and respond quickly to your cash flow needs. We democratize access to finance according to three main principles: 

• Speed: with possible financing in less than 48 hours
• Flexibility: to keep you in control of your business
• Transparency: with transparent and simple commissions. 

This simplicity and speed is further enhanced by our integration tool, which allows you to submit your file and us to analyse it in just one click! 

After connecting your tools effortlessly, you'll be able to view your Karmen score and its analysis. We provide you with detailed dashboards based on your score, before offering you transparent competitive financing deals to accelerate your growth. 

You can benefit from Karmen funding as often as you like! There is no limit to how often you can use it. Karmen is a true line of funding that can increase in amount as your income increases. 

How does the RBF work? Very simply, quickly and transparently. That's our vision of revenue-based financing at Karmen. Instead of diluting your capital or committing your personal guarantee, opt for a solution that is 100% adaptable to your vision of your company's growth. In just a few clicks, check your eligibility for this financing solution through our API, choose the type of financing that suits you best and your repayment schedule, then pay back monthly, as and when your monthly revenue is generated. While some venture capital funds or banks may find it difficult to adapt to the financing of digital companies that wish to remain on board alone, RBF responds to their search for specific financing needs such as customer acquisition, marketing, recruitment or product development. 

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If you have any questions, please do not hesitate to contact one of our advisors or apply directly for financing at Karmen!