When You Should Use Upfront Capital to Get Funding

After years of supporting founders with RevShare Capital, Novel Capital launched Upfront Capital, a simple and straightforward way to trade future subscription revenue for immediate capital. 

For businesses with predictable revenue, Upfront Capital can provide the funding needed to grow your company your way. The funding process is seamless, transparent, and fair. And the best part, the cost of capital is a single, one-time fee. 

So how does it work? And what are the advantages of Upfront Capital? Let’s dive right into it.

 

How Upfront Capital works

With Upfront Capital, trading the value of future subscriptions for cash now is simple. First, apply via the Novel Capital platform. Then select the monthly, quarterly, or annual contracts you want to trade for capital. Upfront Capital provides an influx of operating capital, ranging from $100k to $5m. Novel Capital works to approve first access to the platform in less than 30 days, and sends founders a clear, simple agreement. Businesses approved by Novel receive capital, minus the one-time fee, directly into their bank accounts. 

Thinking you might leverage Upfront Capital again in the future? Novel Capital values long-term relationships with portfolio companies, and can provide additional capital on-demand as you add new customer contracts. We look forward to growing with you. 

What is the one-time fee? 

At Novel, we value transparency. We believe founders should know their cost of growth capital, whether it’s equity, debt, revenue-based financing, or any other alternative. Knowing these costs upfront allows founders to better decide what form of capital is best for their business, near- and long-term.

When we launched Upfront Capital, we carried that deep belief in transparency into structuring our own fees. Upfront Capital’s one-time fee is 8% of your monthly contracts. Not sure what that means in terms of cost of capital? Don’t worry, we’ll do the math for you. It’s equivalent to an 18% APR.

When might Upfront Capital make the most sense for my company? 

If you’re a founder of a software company with predictable revenue, Upfront Capital might be a great fit if: 

  1. You have significant customer contracts and want on-demand access to your contract’s value to further grow your customer base, or you want to invest more deeply to generate more revenue from the contracts that you have. 
  2. Growth for you means mergers and acquisitions. Having access to on-demand capital to acquire and onboard new businesses is your secret sauce. 
  3. Your business is seasonal and your shortfall now will be resolved in a few months, as it is each year. 
  4. You have to offer discounts to customers to entice early payment. Getting the full contract value upfront with Upfront Capital increases revenue now, and protects those contracts’ value next quarter or year. 

The strengths of Upfront Capital

Upfront Capital means reinforcing your momentum — not hindering it. It means flexible capital tools that grow with you. Novel Capital’s process is intuitive, simple, fair and built with the entrepreneur in mind. 

We honed our funding terms from our own experience as entrepreneurs. That’s why: 

  • Funding is simpler than bank debt.

Unlike traditional term loans, our funding carries no personal guarantees, no UCC filings, no minimum cash balances, and no hard-to-track covenants. Our process replaces unwanted surprises with streamlined simplicity. 

  • Entrepreneurs are empowered to build their companies their way.

With access to meaningful, non-dilutive growth capital, entrepreneurs build their companies their way with simple, flexible and fair growth capital options designed to support momentum. We are straightforward and predictable, so you can plan well. 

  • Revenue-based financing is less expensive than short-term online lenders.

Daily draws for short-term lenders hide the real costs of capital, which can often be in excess of 30% APR. Upfront Capital has a simple, clean, one-time fee of 8% of your monthly contracts. That’s an APR of 18%.

Your teams have done the work to secure significant customer contracts creating meaningful, predictable revenue. Putting the revenue to use today means further growth tomorrow. 

And for founders who are considering revenue-based financing, learn how the founders of Wisboo and Onshore have benefitted from Novel Capital. You can also check out additional common reasons tech companies tap alternative financing solutions here

Helping you get to the right funding solution

Getting to the bottom of what type of funding will be the best option for your company is no easy task. We know how difficult finding the right capital can be because we’ve been in your shoes as founders, and have lived through multiple scenarios in the evolution of our own businesses, good and challenging. 

As you think about Upfront Capital, or other forms of alternative funding as tools to help drive your business growth — let’s talk. We’d love to learn what challenges you face, share more about Novel Capital, and explore how we can help. 

Reach out to us by completing the form here, and we’ll get something on the calendar.