What are the benefits of revenue-based financing for eCommerce?

Answer 1

Benefits of Revenue-Based Financing in eCommerce Startups

Inventory and marketing with more working capital: The most important part of choosing revenue-based financing is cash flow problems in eCommerce Businesses. This isn't caused due to poor financial management or slow-paying consumers; it's due to your suppliers!

The root problem is many eCommerce businesses work with the supplier to minimize the cost of goods, especially in Southeast Asia like In India, where workers and materials costs are lower.

Without sales revenue, you don't have the funds to stock up, not to mention the marketing costs required before the sale of items.

If you buy this new product, the costs of inventory and promotion might cause you to go into the red.

This is why Revenue Based Financing for your eCommerce startup business can bring you plus without any Hesitation. It provides you with money so that you may immediately cover your working capital demands. There is no need to use personal assets to sustain your firm or cut corners on required expansion expenditures.

Plan ahead for peak seasons

E-commerce merchants face a pleasant dilemma every time a busy season approaches.

The fact that there will be increases in both demand and revenue makes sellers delighted. However, there will also be issues.

The question that will arise is, what will you do about paying for the inventory before you sell it?

If your company isn't exceptionally affluent, financial restrictions could make it difficult for you to capitalize on seasonal changes.

This is why Revenue Based Financing helps you to buckle up in times of peak periods.

RBF funding can be applied to the acquisition of merchandise, advertising, or any other expense that will be beneficial during the busy season. Most significantly, it may increase your sales income.

Maintain control over your company while protecting equity upside.

There are a few options when it comes to eCommerce funding.

E-commerce funding options such as venture capital and angel investments are potentially feasible. In reality, though, they are out of the price range of typical e-commerce companies since investors are focusing on market disruptors.

More significantly, there are a lot of restrictions on equity financing.

The first problem is that your equity is diluted since venture capital companies and angel investors obtain a percentage of your company's shares.

And The second problem is Seat on your board of directors are also requested by equity investors. They want a voice in how your firm is run since their money stays with you.

In contrast, revenue-based financing is non-dilutive.

For Example, Parallel Cap does not get any shares, options, or warrants in exchange for financing you. Additionally, no board positions will be filled.

You'll be able to protect equity and keep control of your business with revenue-based financing.

More accessible than bank loans:

Bank are always happy to help you with your financial needs. However, banks don't provide you with any monetary help when it comes to building up an eCommerce business.

The bank will return you by saying," We are sorry, finance for eCommerce Business is too much risk", as it is still unfamiliar to many banks.

However, revenue-based financing is tailored for higher business growth. Your request for investment won't be turned down just because your company has a high risk-return profile.

In addition, while applying for RBF finance, your company's credit history is typically not taken into account. Additionally, no security is needed.

Many revenue-based finance firms are eager to offer e-commerce businesses expansion cash. We even priorities e-commerce here at Parallel Cap.

For instance, our platform for data integration seamlessly integrates with your analytics and sales platforms.