Article 4NPHM Should you raise equity venture capital or revenue-based investing VC?

Should you raise equity venture capital or revenue-based investing VC?

by
Arman Tabatabai
from Crunch Hype on (#4NPHM)
David TetenContributorShare on TwitterDavid Teten is a Venture Partner with HOF Capital. He was previously a Partner for 8 years with HOF Capital and ff Venture Capital. David writes regularly at teten.com and @dteten.More posts by this contributor

Most founders who are raising capital look first to traditional equity VCs. But should they? Or should they look to one of the new wave of revenue-based investors?

Revenue-based investing ("RBI") is a new form of VC financing, distinct from the preferred equity structure most VCs use. RBI normally requires founders to pay back their investors with a fixed percentage of revenue until they have finished providing the investor with a fixed return on capital, which they agree upon in advance.

This guest post was written by David Teten, Venture Partner, HOF Capital. You can follow him at teten.comand @dteten. This is the 5th part of our series on Revenue-based investing VC that touches on:

From the founders' point of view, the advantages of the RBI model are:

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