Could recurring revenue financing drive growth in a turbulent market? – Tech Crunch

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

You can sell a portion of your company to venture capital, but in a bear market it will be worth less than it should be (and less than it might be in six to 12 months). You can even sell the promise of payment with interest to the lender, but you will probably have to accept higher rates, restrictive covenants, and possibly guarantees to sell other debts they can buy.

But your revenue is the only asset you can sell that gives you the predictable, stable and risk-free returns that investors look for in a market full of uncertainty.

Recurring Revenue Funding (RRF) isn’t just a new lending package, it’s an entirely new model for financing a business, and that’s critical. A loan based on your income is still a loan tied to policy-driven interest rate changes. Recurring revenue financing treats your revenue as a tradable asset, which you then sell to investors.

By selling future revenue streams to investors for up-front capital, they receive a stable return and you can grow faster based on your revenue already booked, taking advantage of great opportunities and the time value of capital with expansion.

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

For companies with recurring revenue streams, this is a flexible way to fund growth when venture capital and loans aren’t an ideal or accessible option. It can also be a great tool to use in addition to equity financing. By leveraging your recurring revenue, you can strategically enter your next stock round when the time is right for the best results.

How Founders Use RRF

Now that we’ve seen what RRF is and what it isn’t, let’s talk about how the founders are using it to grow the business. RRF has some major benefits over traditional finance which makes it an incredibly agile source of finance.