Kansas City-based Novel Capital has sneaked out and announced $115 million in seed funding in equity and debt from undisclosed backers – the latest move in the growing field of companies looking to offer founders of alternatives to traditional venture capital.
Novel offers traditional revenue-based financing products through which businesses can receive up to 30% of their expected annual revenue in advance in exchange for a percentage of future monthly revenue earned for three years. It also offers what it calls “Upfront Capital” which gives companies access to future subscription revenue for an upfront fee.
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As recently as last week, based in New York Cap-hunting closed an $80 million Series B round. The Company’s platform allows recurring revenue businesses to access future capital in advance based on their annual recurring revenue minus what is typically a 5-10% discount. Two weeks earlier, based in Miami Pipe– which also helps businesses fund based on their annual recurring revenue and was valued at $2bn after its $250m strategic equity investment in May – announced the acquisition of the London-based company purely capitala media and entertainment finance company, and is launching its own media and entertainment division.
Alternative finance platforms seem to have been growing in popularity for some time now and it will be interesting to see what role they could play as public markets have been hit hard by inflation concerns and global events, and there There have also been rumors that private markets are slashing valuations as well.
Will platforms offer businesses a lifeline if the business becomes harder to find, or will startups fear receiving upfront subscription revenue if the economy gets tough?
Time will tell us.
Drawing: Li Anne Dias.
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