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Entrepreneurs who’ve figured out a “money machine,” but are cash-constrained as to how fast they can grow. VCs can only “swing for the fences” on billion-dollar market opportunities. Banks want personal guarantees and/or hard assets as collateral. There’s no middle ground; it’s like saying you have to have an aircraft carrier, or else stay on terra firma. We want to help all kinds of corvettes, frigates, cigarette boats, catamarans, and hydrofoils make the journey to startup success.

Roughly, we can invest $100k to $500k. As a percentage of your revenues, we can invest approximately 10%, and up to 20% with the right circumstances. So if you’re doing $2 million trailing, we can invest $200k – $400k.

We will look for a percentage of topline revenue (in the range of 1% to 10%). Generally, this is calculated and debited monthly via ACH. We also ask for a small stock warrant. For flexibility, we routinely set up two-tier structures, where we might take a higher rate until principal is repaid, then a lower rate thereafter.

Unlike a normal “loan,” the RBF model doesn’t have a set payment amount each month. Instead, the payment due floats with your revenue level, such as 2% of topline revenue. So, if you beat your plan and grow faster, your “rate” goes up, but if you miss plan, your “rate” goes down.

But you asked about the rate, so we’ll be straight with you: we want to earn about 25% IRR, on average.

No. When we structure the RevenueLoan, we will set up either a target total payback cap, or some other option (see below) for terminating the RevenueLoan in a mutually acceptable way.

Yes. While most RevenueLoans will be structured as multi-year investments, we include as a standard feature fair early buy-out clauses.

Yes. We’re taking a lot of risk, and we think a high return is fair. But it’s not so high that a business with solid margins and solid growth plan can’t “beat” the rate. If you think about our model, you’ll realize that we only want to invest in cases where the business can continue healthy growth even after paying our RBF percentage — because we’re aligned with the entrepreneur on revenue growth.

We did two RBF investments before raising the funds for Lighter Capital. Plus, like all explorers, we stand on the shoulders of giants — pioneering investors like Arthur Fox in New England have been using this model, in slightly different categories or with variations, for years. (No affiliation implied, just respect.)