A founder rejected venture capital because VCs thought their media business couldn't scale past $30 million in revenue. Instead, they took revenue-based financing: a San Francisco firm gave them $500k to $1M upfront, repaid at 3-5% of monthly revenue until the lender gets three times their money back.
We've chatted before about kind of raising some debt or using debt instruments, mixture of debt and equity, whatever, to grow this thing. You didn't want to go VC-backed, which is a whole different game that doesn't always work, especially in media. So tell me more about the funding side of it then.
VCs are unicorn hunters, right? They're looking for the TikToks and the Twitters and the big companies. A lot of the feedback we got when we went to the VCs was, you have a great business model. I believe in your TAM. You've got an awesome team. But I just think this is only like a, you know, $10, $20, $30 million revenue company. I think they may have been wrong on like how big they can get. But understood, right? Like, that's fair feedback. There's this company out in San Francisco that kind of realized that and headed this new solution where basically what they did was they would give you money. So like, I think it was like $500,000 or $1 million. Starting a year later, you would pay back like 3 or 5% of your revenues until you paid back 3x on the initial capital. It was really, really brilliant, in my opinion, structure that they came up with. And like, we kind of leaned into that.
