Financing for high-growth companies is a challenge that has not been easy to solve. An innovative solution that has emerged is revenue-based financing (RBF). Through this model, startups and high-growth companies can find funding to develop products or invest in marketing. It can be a much more feasible tool in the form of debt than a bank loan. It is also an alternative to a new round of capital that could dilute and distract the founding team too much.

Revenue-based financing allows companies, especially those with subscription-based models, to leverage their anticipated future cash flows to secure funding. It is a type of loan that is repaid over time; however, instead of fixed monthly installments like those of a typical bank loan, in this case, the payments are usually structured as a percentage of the monthly revenue, and therefore become variable payments that adjust to the business’s income streams.

Advantages of Revenue-Based Financing

Among the advantages of this financing for startups and high-growth companies are:

• The founding team can retain ownership of the company: since equity is not diluted, the founding team maximizes its gains in the event of a future sale of the company.
• It is a viable alternative to the nearly impossible bank loan: for companies still operating at a loss, bank financing is not an option, but this instrument can be.
• It is usually quick and does not require personal guarantees: the founding team saves time on valuations and negotiations with investors.
• There is no need to justify the use of the requested amount: additionally, in debt repayment, flexible payments based on revenue make cash flow management easier.

A growing financing option

This is undoubtedly a financing model that is on the rise. In 2023, its volume was $3.38 billion (according to the Revenue-Based Financing Global Market Report by The Business Research Company). It is projected that in 2024 it will increase by no less than 70% to reach $5.8 billion. Furthermore, this growth is expected to continue, with a CAGR of 64% through 2028, reaching a transaction volume of $42 billion in 2028.

In an economic situation of high uncertainty for companies, it is becoming increasingly clear how important it is to have adaptable and favorable financing solutions for businesses. Revenue-based financing offers the necessary flexibility and accessibility for many small businesses and startups to reduce their financial stress amid a scarcity of credit and capital. As we have seen, it is a very suitable financing option for high-growth companies. It not only provides the necessary capital for growth but does so in a way that is aligned with the financial reality of startups.

f you want to learn more, you can download this article from Harvard Deusto Business Review

In the alternative financing market, the dynamism of some private debt fund managers stands out, leading to increasingly well-adapted direct lending financial solutions for the needs of medium-sized Spanish companies. In this post, we present a couple of proposals that can cover a wide range of financial needs for medium-sized companies:

1. Loans with a term of up to 6 years to finance the development of company growth plans. The amounts range between 1 and 7.5 million euros. It is suitable for companies with more than 2 million euros in revenue, a minimum EBITDA of 500,000 euros, and more than 5 million euros in assets. The two main advantages are the flexibility in the amortization terms, depending on the company’s repayment capacity, and the absence of real guarantees.
2. Loans of up to 12 months to meet any specific liquidity needs, with amounts starting from 500,000 euros. It is designed for companies with revenues exceeding 5 million euros, and no real guarantees are required.

To learn more about the characteristics of each of these solutions, you can contact your Altria Corpo consultant, click on https://altriacorpo.com, or write to corporate@altriacorpo.net.

Do you want to know more about direct lending? In this document published by Altria in the well-renowned ODF  we explain it to you.

CFOs face increasing challenges in corporate financing, which require agile decision-making in an increasingly complex environment. In this context, generative artificial intelligence (GAI) emerges as a powerful tool, revolutionizing how CFOs approach the financing and financial management of their companies.

Generative AI, which specializes in creating new content from existing data, can offer effective solutions for a wide range of financial needs. One of its most notable applications is the automation and optimization of financial planning. By analyzing large volumes of historical and real-time data, generative AI can identify patterns and trends that are not evident at first glance. This allows CFOs to develop more accurate financial forecasts and make informed strategic decisions.

Additionally, generative AI facilitates financial risk management. Traditionally, CFOs devoted a significant amount of time and resources to assessing the risks associated with different investment decisions. Now, with AI’s ability to analyze complex datasets and generate predictive models, CFOs can identify potential risks more accurately and quickly, and formulate more effective mitigation strategies.

In summary, generative AI is transforming the role of the CFO, enabling more informed and efficient decision-making, and redefining corporate financing. At Altria Corpo, we understand that adopting advanced technologies like generative AI is essential to remain competitive, and we are implementing it both in internal processes and in improving service to our corporate clients and financial suppliers.

If you found this topic interesting, you can find more information by reading this article from La Vanguardia: Los directores financieros ganan protagonismo con la IA generativa.

The news of BBVA’s hostile takeover bid for Banco Sabadell has once again raised alarms about the high level of banking concentration occurring in Spain and the negative effects it may have on the business sector of our country. The financial function of a company plays a crucial role in this scenario, facing the challenge of managing these strategic changes effectively.

The bank takeover will surely alter the financial landscape for the client companies of the affected entities. These events lead to a consolidation in the banking sector that can result in fewer financing options for companies. Moreover, it is more than likely that the merged entities will choose to reduce their risk exposure by reevaluating their credit portfolios or modifying existing financing conditions. Given this situation, it is vital that the financial function of the company is prepared to act proactively.

Diversification of Financing Sources

Diversifying financing sources is a fundamental strategy to mitigate the risks associated with banking concentration. Companies should consider a broader spectrum of options, including not only traditional bank financing but also alternatives such as debt funds, fintech platforms, specialized financing in factoring or leasing, and private equity solutions. This diversification helps reduce dependency on a small number of banks and offers greater flexibility in capital management.

Anticipation of Changes

Anticipating market movements and trends in banking consolidation is another key component. Companies must constantly monitor the market to foresee future takeovers and understand their possible impacts. Scenario analysis and financial planning must incorporate these possibilities, preparing the company to act swiftly in the face of imminent changes.

Partnership with Experts

In these times of uncertainty and financial complexity, partnering with a consultant specialized in corporate finance is more important than ever. An expert consultancy can provide the necessary market intelligence, as well as strategic and operational advice to navigate the challenges presented by bank takeovers. From evaluating current financing conditions to searching for viable and sustainable alternatives, a debt advisory expert like Altria Corpo can play a decisive role in optimizing a company’s financial structure.

In summary, effectively managing a bank takeover from a company’s financial function requires proactive planning and a well-defined strategy. Diversifying financing sources, constant market monitoring, and collaboration with specialized debt advisory consultants are crucial components to ensure that your company not only manages but also benefits from the constantly evolving dynamics of the banking market. At Altria Corpo, we are prepared to help companies navigate this complex environment with expert advice and customized solutions that will protect and enhance the financial health of your business.