A big Thank You goes out to Scott Austin for shining the Wall Street Journal's light on the Revenue/Royalty Based Finance (RBF) lending model:
Startup companies are like suprmodels: sexy, slim, unpredictable, and they make headlines every time they crash spectacularly or have a costume malfunction. So they naturally get the lion's share of the media attention, including this article.
However, small businesses that are steadily growing - the "character actors" in the cult of media celebrity - are usually a better match for the revenue-based finance model.
Here's why: The key thing to determining the viability of an RBF loan is whether the predicted growth is feasible or not. So if you have an established small business with an established customer base and couple of quarters worth of earnings to graph, then predicting future earnings is less of a gamble.
So while RBF could be an alternative financing option for certain startups, I think the biggest target for RBFs are the 6 million business in the USA who have 10-99 employees, produce 65% of the job growth, and more than 50% of the GDP. (And if you are one of these businesses, you should fill out our application form to start the conversation!)
These are the character actors of American businesses; less-sexy but more reliable. The RevenueLoan sweet spot. But who are we to say no to a supermodel? :-)