With a robust ecosystem in the e-commerce market, amazon has established an apt example of the world’s largest marketplace across a wide range of product categories. The trend has admired many sellers for growing their business online and making more profit. However, creating an online-first brand has never been easier because brand building requires growth capital. Therefore, the concept has been accepted only by a few businesses because traditional equity and debt are expensive and time-consuming. Thus, even having such supporting players in the ecosystem, success remains far away for some businesses due to the large funding gap.
Many traditional equity investors and personal lenders provide funds to fulfill this funding gap. But, equity investors not only evaluate potential but also see profitability, inexhaustible documents, and require equity. Here the innovating financing system enters as Revenue Based Financing (RBF). RBF is popular because of its nondilutive, no Emi, no interest, and simple one-time flat financing fee. Additionally, RBF is leading because of the following key features –
- No fear of equity dilution
- No need for a personal guarantee
- No lengthy and tedious process
- No heavy fixed Emis
- No exhaustive documentation process
RBF has financed several brands across industries globally. We can notice unmatchable growth as more and more businesses are opting for the RBF financing model. “The global Revenue Based Financing market size was valued at USD 1750.0 million in 2021 and is expected to expand at a CAGR of 60.76% during the forecast period, reaching USD 30210.0 million by 2027.”, a report by DigitalJournal.
RBF is an excellent facilitator for growth in terms of brand perspective. Consumers are now approaching the marketplace due to the wide range of availability, high trust, and customer-first approach. Simultaneously, it is the fastest way for a new brand to connect with an expansive consumer base. From a finance perspective, RBF helps your e-commerce company –
- For managing working capital and building inventory so that your products never become “out of stock”.
- For inventory financing, increasing production capacity, and inventory expansion. These are cyclic expenses with high ROI visible in the revenues. The result will help you to focus on the strategic growth of the brand.
- Raising capital for promotion, marketing, and ad expenditure. It helps to create an effective eCommerce marketing strategy.
Is RBF A Good Choice For You?
How to determine if your growing business needs RBF funding? It is the best option if you have :
- Strong Unit Economics
- Good Gross Margins
- Steady Revenues with seasonal fluctuations
- Bank EMIs are affecting cash flows
- Need capital for revenue-generating activities like marketing, inventory, or promotional and marketing activities.
Thus, RBF financing can be deployed for fast growth at any stage of the business. You can use RBF for managing working capital, marketing & advertising spending, inventory expansion, new market expansion, or capital expenditure spending. The most promising thing you will get by opting for RBF is flexibility in terms of documentation, capital, paying back loans, No equity, and No Emis. RBF venture Vedfin has financed more than 100+ brands across a vast range of industries extending e-commerce, FMCG, Health and fitness, fashion, and lifestyle. For quick RBF funding, click vedfin.in.