Shaw Yean Lim is the CEO of Hustle Flywheel, providing revenue-based financing to online businesses. Shaw is passionate about helping founders retain control and grow their company efficiently. She has 13 years of experience in financial services, with expertise in building credit and derivative products.
Masterclass Topic: Overview of Revenue-based Financing 
When founders think of raising money for their business, they immediately think of selling a piece of their company – an expensive endeavour, or applying for a bank loan – which involves taking on personal risk. This Masterclass focuses on an alternative funding option called revenue-based financing (RBF), a non-dilutive form of financing which does not require a personal guarantee.  Founders can use RBF to fuel business growth and retain control of their company.
Key take-aways

1. Walk away with a clear understanding of the differences between revenue-based financing, equity, venture, debt and others.
2. How to determine your cost of capital when considering various types of funding.
3. Pros of using revenue-based financing (RBF) to fund company growth.
4. Qualifying criteria for revenue-based financing
5. Best ways to utilize revenue-based financing including some case studies.

 
Call Details:
Wednesday, 30th September 2020
12pm-1pm
https://us02web.zoom.us/j/84269282824?pwd=dUxPendNcStPM2tpRnU5SE1FclhYZz09
Meeting ID: 842 6928 2824
Passcode: 381045
 

KEY TAKE-AWAYS FROM THE CALL:

Revenue based Financing FAQs

Provided by Shaw Yean Lim, Flywheel Financing. 

1. What are some of the key differences between revenue-based financing, equity and debt?

RBF is somewhere in between equity and debt. It’s a new asset class, with many possibilities for both investors and companies. RBF itself is non-dilutive, meaning the provider doesn’t take ownership in the company in exchange for capital, leaving the founders to retain more control of their company. It is similar to debt in that the cost of the capital, i.e. the interest rate or fee is known upfront, while equity payoffs vary depending on the outcome of the company in the future. Equity, RBF and other forms of debt can co-exist on a company’s capital structure.
 

2. How does the cost of capital work when considering RBF? 

At Flywheel, we determine the fixed fee % on top of the financing we’re offering upfront. What founders can do is consider the fee as the cost of capital, and the net benefit or ROI you can generate for your business on top of that fee. Benefit can be in the form of other value added components that the investor provides – advice, network, founder community and growth education.
 

3. What are the pros of using revenue-based financing (RBF) to fund company growth?– Transparent costs

• Cheaper than equity financing
• Reduce time spent fundraising (Flywheel gets back to founders with a quote in 72 hours)
• No personal guarantee needed
• Non-dilutive – retain control of company
• Achieve revenue targets with clear ROI attribution

4. What is the qualifying criteria for revenue-based financing?

At Flywheel, we require that the company has early product-market fit and is generating revenue. We like businesses that can acquire customers at a positive LTV to CAC (lifetime value to customer acquisition cost) and subscription businesses which can retain customers effectively.
 

5. Can you share some examples or best ways to utilize revenue-based financing?

Spending on key drivers of the business is the best way to optimize the use of RBF. These can be digital marketing (Facebook, Linkedin and Google ads) and inventory for e-commerce businesses as these have direct impact on your top line.
 

6. I feel like I’m not ready for revenue-based financing nor equity funding because my business is pre-revenue. 

If you’re working on something, it’s never too early to engage in conversation with investors. We welcome early founders to talk to us at Hustle Fund and Flywheel. My email is shaw@hustlefundvc.com. And if you apply to us through our form, you’re considered for both equity and revenue-based financing. Also, our GP at Hustle Fund, Shiyan Koh, has provided here a candid and helpful peek into what goes through her mind when she’s listening to a pitch. Enjoy!
 

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