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Boost Your E-commerce business With Revenue-Based Financing!

It's now easier than ever to establish your brand mostly online. Building a brand is made easier by a strong ecosystem of channels for...

Revenue-Based Financing!

It's now easier than ever to establish your brand mostly online. Building a brand is made easier by a strong ecosystem of channels for marketing, distribution, and commerce.


With products in a variety of categories, Amazon is today the largest marketplace in the world. We have witnessed a significant number of these brands take off on e-commerce platforms such as Amazon, coinciding with the rise in new brand formation in India's consumer brand market. Amazon India added 1.5 lakh new sellers to their platform in 2020 alone!


However, a brand needs expansion money to really take off. a notion that, due to the high costs and lengthy application processes associated with traditional stock and debt, very few enterprises have yet to fully embrace. There is still a significant funding vacuum even though supporting companies in the ecosystem have quickly changed to meet the needs of consumer brands in this new era.


While banks need to see profitability and go through their never-ending checklists, equity investors need to assess your ability to return 10x–20x of their investment. Enter now: Financing Based on Revenue! A straightforward one-time flat financing fee, without any EMIs, and nondilutive to boost your brand!


Combining the best aspects of debt and equity financing is the RBF concept. Key characteristics of RBF include:


·       Growth finance based on a proportion of sales with repayments. Revenue-based financing allows a business to give capital to an investor in exchange for a predetermined part of future revenues.

·       No individual promises are made

·       With a 48-hour turnaround time from data submission to soft sanction, this process is swift and data-driven.

·       Absence of equity dilution


RBF financing has helped brands in a variety of Indian and global industries develop, and an increasing number of companies are choosing to use this financing strategy. The global revenue-based financing market is expected to reach $42 billion by 2027, rising at a CAGR of 61.8% from 2020 to 2027, due to the proliferation of e-commerce, D2C, and social commerce companies!


When it comes to brands, RBF is a great enabler of expansion. Because of their high levels of trust, customer-first philosophy, and exceptional convenience, consumers are increasingly gravitating toward online marketplaces like Amazon, which provide new brands with the quickest path to mass market adoption.


What are the many business models used by Amazon sellers, and how does RBF fit into them?

Regarding funding, Amazon brands fall into two categories:

1. Companies that are able to raise funds to build inventory and manage working capital

Products and brands must be able to recognize the customers they want to sell to and adjust their offerings and customer experience to suit their needs when consumers shift from "searching" to "choosing." Given the difficulty of monopolizing consumer discretionary products, it is crucial to never run out of stock!


Expanding production capacity and inventory benefits D2C brands, private labels, and distributors. Inventory finance becomes a wonderful fit for RBF because these are cyclical expenses with a high return on investment that is evident in the revenues. Raising RBF for inventory financing gives you the flexibility to concentrate on your brand's strategic expansion.


2. Companies that are able to raise money for advertising

A component of any eCommerce marketing plan should involve advertising. Using an advertising plan to engage with your customers is crucial as the industry becomes more and more competitive. It's imperative to try out various ad types, targeting possibilities, and brand-specific chances.


Increased spending on advertising to drive traffic and sales is essential to revenues. For a seller, Amazon advertising might be the most effective sales tactic when executed properly. Since capital may be raised for a certain time period, which immediately effects revenues, RBF fits ideally into this use case.

Therefore, how can you tell if your company is ready to raise money through RBF?

You should use RBF if:

·       You have good gross margins due to your superior unit economics.

·       Your income is consistent with occasional seasonal variations. [Aside: Klub provides two options depending on your capital requirements & revenue. The monthly earnings threshold for the plans is as low as Rs. 5 lakhs.

·       Your cash flows are being burdened by bank EMIs.

·       Capital is required for ongoing expenses like as marketing, inventory, and capital expenditures that will fund revenue-generating activities.

As long as your revenues are steady, if not increasing, you can raise Klub's RBF at any point in your company's development. RBF may be used to achieve quick expansion for any size company, regardless of how many investors are on your cap table or how small you are and how you raised money. RBF is frequently used by businesses for the following:


·       Spending on marketing and advertising

·       Growth of inventory

·       Taking care of working capital

·       Expansion into new markets

·       Spending on capital projects


These are the typical use cases for enterprises, but the flexible financing alternatives offered by emerging players in the RBF area are a great feature. They were founded to support consumer brands in scaling with extremely flexible finance, and they are currently assisting more Indian brands in reaching daily goals. Klub plans to fund more than 350 consumer products in 2021 alone, spanning a wide range of sectors such as FMCG, fashion & leisure, and health & fitness. There has never been a better moment for an Indian consumer brand seeking to raise funds for expansion.

Read More:

The Best Amazon Inventory Control Tools for Your Online Store

Ways to Sign Up for Walmart Spark Reviews

How to Integrate Repricing into Your Amazon Growth Pipeline

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