Founders First Capital Partners, an accelerator and funding agency which gives revenue-based financing to companies led by “underrepresented entrepreneurs” working in underserved markets, has acquired a $100 million dedication to increase its operations.
The San Diego-based investor raised the debt financing from Community Investment Management, a big debt-focused influence funding fund.
The revenue-based financing mannequin is a brand new one which a number of startups are starting to discover as a solution to take non-dilutive capital for early stage companies which may not qualify for conventional financial institution loans.
Firms like the brand new media startup, The Prepared, which gives tips about catastrophe preparedness, used income financing as a solution to get its personal enterprise off the bottom. And different firms are turning to the financing methodology too, in accordance with traders from Lighter Capital.
At Founders First Capital Partners, the brand new financing will increase its lending operations to firms which can be already producing between $1 million and $5 million in annual income.
The brand new program is ready to launch in January 2020, increasing the agency’s footprint as a monetary providers agency for minority and different underrepresented founders, the corporate stated in a press release.
The agency focuses on companies led by folks of coloration, girls, and army veterans and concentrates on entrepreneurs whose enterprise function in low and middle-income communities exterior of the normal funding networks of Silicon Valley and New York, the corporate stated.
It additionally operates an accelerator program for entrepreneurs that meet the identical standards.
Founders First may be very happy to have secured such vital funding that permits us to increase our efforts to companies which can be led by underrepresented founders or those who serve underrepresented communities, stated Kim Folsom, co-founder and chief govt of Founders First, in a press release.
Income-based financing can in some circumstances be a greater choice for service-based, social influence firms, in accordance with Jacob Haar, a managing accomplice with CIM, who beforehand labored at Minlam Funding Managemet, a hedge fund working within the micro-finance area.
Each microfinance and revenue-based financing include dangers — notably across the charges that these lenders can cost for their financing.
However it’s a distinctive alternative to open up founders to extra forms of financing fashions.
CIM is happy to accomplice with Founders First to increase revenue-based financing to assist underserved and underrepresented small enterprise founders, together with folks of coloration, girls, LGBTQ, and army veterans in addition to small companies positioned in low to average revenue areas,” Haar stated in a press release. “Now we have discovered revenue-based financing to be a compelling different to enterprise capital and glued fee loans as a forward-looking and structurally versatile funding to assist enterprise progress. We consider that Founders Firsts distinctive advisory and revenue-based funding platform allows underrepresented small companies to beat systematic bias and obtain their potential.