Finance

Revenue based lenders (RBLs) are the next new thing in Europe, with many new funds dedicated to this new way of non-dilutive finance.It is a simple product, meant to help founders with working capital. Cash is advanced to founders, at a rate of 1x to 1.5x their revenues. The repayment happens at a fixed percentage of their revenues, between 10% to 25% which is dependant on the risk rating.Unfortunately, with RBL’s there are cases when pricing is not necessarily clear to the founder, especially if you consider multiple loans throughout the year or are gradually increasing your debt exposure.Often, it is presented as a friendly solution, and it can be for founders with a slightly elongated sale cycle where they have the ability to manage cash-outflows from equity or reserves.With RBLs, the payments are not fixed, and vary from month to month until the balance is repaid. The lender gets the regular amount of income dependant upon the percentage of revenue.Many founders are starting to realise that there is more to the story than a what RBLs advertise (‘simple fixed fee’). In some cases, they end up being higher than what was originally presented to the founder.One thing is clear the fixed fee is not an annualised interest rate. The reality is that if you took the facility again, another fixed fee would apply to the new loan. If your company is growing quickly then you could end up recycling the cash and taking 3 or 4 RBL facilities per year. It means that a great company end up paying somewhere 18%-36% on an annualised basis depending on their credit rating. If we add to this the fact that many of these companies will be increasing the loans to cater for a growing business activity, it is easy to see how lucrative the model is.At Juice, we are fundamentally entrepreneurs, building businesses similar to those of our clients. We think that both our message and the way our products operate needs to align.We have created products where founders can access a revolving credit facility without having to apply for multiple credit applications. In some cases, we need to scale our facility sizes over time, to allow them to grow and build resources for their ad campaigns, or inventory. In other cases, we would not want our companies to be over-exposed, especially if they are dealing with cyclical or seasonal businesses. Juice has been created for companies that are on a mission to bring unique products to their consumers.What to keep in mind before going for RBL?Although revenue-based financing has many benefits and appears as a simple product, there are elements founders should pay attention to before opting for this source of funding:Not for new businessesLenders always check the revenue graph of a company before investing money in its business. They have certain rules and eligibility criteria. And if any business does not fulfill the criteria the lenders do not invest their money. So, the revenue-based financing is not for the newly established businesses.Capital costIn Revenue-based financing cost of capital is very high. Because you have to invest much more interest rather than the real investment. However, the monthly payment process makes the high-interest rate accommodatable.Prepayment incentivesA revenue-based lender does provide you prepayment incentives. Prepayment incentives are the discounts or pre avoided interest that lenders offer to the borrowers to encourage. But the revenue-based lenders do not provide such kinds of incentives So, that’s the reason revenue-based financing is not preferred.Monthly paymentsRevenue-based lenders require monthly payments.In starting a business may face some financial issues and maybe they are not able to pay monthly payments. So, revenue-based financing is not suitable if you have not started selling your products or the profit graph of your business is not high.Long-term paymentsIn revenue-based financing, a borrower has to pay interest for the long term because of the high amount of loan. So, it becomes a very long-term process to pay all predetermined amounts to a lender.

Ad Management SystemsAd management systems allow people to advertise their products on social media to reach more users. Content providers connect with an ad management system and provide content according to the products.Ad Management ToolsThere are many ad management tools available that can handle campaigns across different platforms, including HubSpot, AdRoll, RollWorks, Influ2, Adstream, 6Sense, and Celtra. These systems can help you execute complex strategies for your marketing, enabling founders to understand their user journey to acquisition, as well as running optimisation to reduce CPA or improve conversion.Improving performance, retargeting, and mapping the cadence a user will go through from awareness of your product to buying, is not a simple exercise especially across many social media platforms. Other systems can help founders aggregate and normalise data:HubSpotHubSpot helps to lead the audience to get new opportunities. It also enables an adviser to get the targeted audience. It allows you to share your ads on social media such as Facebook, LinkedIn, or Instagram to increase the reach of your product to as many people. You can keep track of your marketing campaign and get an idea about the public engagement of your content. It is a free tool, but you can also use its premium version to get advanced features.AdRollAdRoll is a tool that helps you to manage your ads by providing many features. It provides AI-based recommendations to target an audience. It also helps you to increase customer lifetime value by offering affordable product deals. And it also allows you to connect with the customers through email or other sources of connections.RollWorksRollWorks is an account-based tool. It helps to target the audience through account identification. It handles sales tasks and prioritizes account-based advertisement. It keeps track of your marketing campaign and helps you to automate your sale emails. Its starting plan costs almost $975 per month.Influ2Influe2 is a tool used to identify your business progress through the engagement of each individual in an advertisement. It provides informative content to engage customers through ads. Moreover, you can collect data about the customer’s email or other social media accounts that show the engagement on your ads.AdstreamAdstream is an all-in-one tool. It helps you to handle customer engagement, media analysis, and automation. It automatically adjusts your content of ads through the content comparison shared around social media or the Internet.6Sense6Sense also provides all the features that other tools are providing. But it uses AI, big data, and machine learning to identify the marketing value and audience behavior towards your advertisement and products. It is also an account-based tool that collects customer data to maintain its audience record.CeltraCeltra is a cloud-based advertisement tool that provides a user-friendly interface. It provides dimensions and metrics to understand your campaign better and achieve your marketing goals.Find out more about Ad Management solutions on Capterra.