Can Recurring Revenue Financing Drive Growth in a Turbulent Market? – TechCrunch

as the saying goes says, “Everyone is selling something.” Sometimes, we forget that when it comes to fundraising. The trick is to sell something that investors really want.

You can sell a piece of your company to a VC, but in a down market, it will be worth less than it should be (and less than it could be in six to 12 months). You can even sell the promise of payment with interest to a lender, but you’ll likely have to accept higher rates, restrictive covenants, and possibly collateral to sell more than the other debt they can buy.

But your income is the only asset you can sell that provides the predictable, stable, risk-free returns that investors seek in a market filled with uncertainty.

Recurring Revenue Financing (RRF) isn’t just a new package for loans, it’s a whole new model for financing a business, and that’s crucial. A loan based on your income is still a loan tied to policy-driven changes in interest rates. Recurring income financing treats your income as a tradable asset, which you then sell to investors.

By selling future streams of income to investors in exchange for seed capital, they earn a consistent return and you can grow faster based on your already reserved income, taking advantage of great opportunities and the time value of that capital as you scale.

Through live data connections, RRF assesses your recurring revenue streams to determine your level of risk. Investors use that level of risk to bid anonymously on your future income, allowing you to get the most capital and the lowest cost. And unlike a weeks or months due diligence process for a loan or equity round, the algorithm can assess your live data in real time.

For companies with recurring revenue streams, this is a flexible way to finance growth when venture capital and loans are not an ideal or affordable option. It can also be a great tool to use in addition to equity financing. By leveraging your recurring income, you can strategically enter your next round of capital when the time is right for optimal results.

How founders are using RRF

Now that we’ve seen what RRF is and isn’t, let’s talk about how founders use it to grow businesses. RRF has some important benefits over traditional financing that make it an incredibly agile funding source.

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