GetVantage brings revenue-based financing to South-Asian start-ups
By Sunniva Kolostyak
Access to equity funding or growth capital has become quite easy for tech-start-ups across the globe due to the growing venture capital industry. But smaller enterprises are often deemed too small for VCs, and getting loans from banks could be another lengthy process. This is what Bhavik Vasa and Amit Srivastava are hoping to address with GetVantage – a revenue-based financing (RBF) platform. We spoke to Vasa, the 2019-company’s CEO.
– Who is GetVantage and how does revenue-based financing work?
“GetVantage is India and South Asia’s first RBF FinTech platform that provides short-term growth capital for digital-first businesses to fuel their expansion plans without having to dilute any equity. RBF is an alternative investment model wherein a business raises capital based on a data-driven projection of its future revenues. The model does not require founders to dilute equity and control in their business. Neither does it ask founders to put up collateral or personal guarantees. The investor recovers the amount invested as a share of the business’s future revenues. That amount typically includes the principal amount plus a flat fee.
“The model adopts the best features from both equity and debt financing. Even though an RBF deal is typically structured like a debt instrument, the investor’s upside is linked to business performance, making them true skin-in-the-game growth partners.
“We are revenue-first in our approach and founders-first in our commitment. GetVantage was envisioned to be founder-first in everything we do. The alternative funding model was born out of the realisation that new-economy, online businesses need a fresh financing solution that is native to the digital economy and designed to work for founders and entrepreneurs by aligning with their mission and values, instead of against them. Our data-driven platform provides capital advances between $25,000 to $250,000. There are no interest rates, no hidden charges, no equity dilution, no warrants, and no board seats. The businesses or brands that we finance do not have to give up any control. There is just one flat fee that is recovered as a small share of future revenues. However, even if a company has great revenue-earning potential, we do not finance a firm that does not earn any income.
“According to Nasscom, 70 per cent of start-ups have cash reserves to last for less than three months and 40 per cent of start-ups have either temporarily halted operations or are in the process of shutting down.”
– What makes RBF a good option particularly for smaller brands and SMEs?
“Access to capital for smaller brands and SMEs is still a major challenge even though venture capital funding has been record-high in India in the past few years. Hence, we wanted to create a model that is tailor-made for small businesses by making the funding process frictionless, quicker, more transparent, and void of any biases by bringing in FinTech innovation and deep data-driven decision-making. After our initial research, we also found that small businesses do not want to give up ownership and hence we focused on the unique ‘founder-first’ approach as we go beyond just providing the capital.
“We have built a powerful ecosystem of over 25 partners that are able to provide companies in our portfolio with the tools and services they need to streamline operations, elevate their marketing, and more. Over the past nine months, we have onboarded over 700 businesses and financed over 50 direct-to-consumer brands/businesses through our FinTech marketplace. What has been amazing to see is that most of them are from outside the metros and over 40 per cent are comprised of women or first-time founders, which is something we are incredibly proud of. The companies in the GetVantage portfolio are all exciting digital-first brands across 17 sectors including eCommerce, D2C, SaaS, Edtech, F&B, Retail, Health & Wellness, etc.”
– Small businesses have been hit particularly hard during the pandemic. What has that meant for GetVantage?
“It has been a very challenging time for everyone on the personal front and for many on the professional front. For GetVantage, we are blessed to be well capitalised and have incredible partners and investors that share a common vision. As more and more small businesses look to recover from the pandemic, there is a growing need for better funding options. From that point of view, the pandemic has meant that a lot of businesses are turning to us to help them grow and scale back to pre-Covid levels. With banks and NBFCs shying away from lending to these small businesses, it puts alternative funding models like ours in a very strong position.”
– You have also launched an initiative called FoundersForFounders. What is it?
“FoundersForFounders is our commitment to paying it forward to the growing community of entrepreneurs. Building a company is tough, lonely, and time-consuming. We want founders to know that they do not have to do it alone. Through this ecosystem, we are bringing together a collective of incredibly talented and diverse founders and operators with a wealth of experience across sectors to serve as a support system for the next generation of young entrepreneurs. Any entrepreneur or business owner can sign up to schedule a casual chat with one of the founders in our collective on their terms. No strings attached.
“We have been working on this initiative for a few months and were excited to officially launch it last week. Given the uncertainty around the pandemic and the truly unfortunate situation in India, we initially were not sure if this was an appropriate time to roll this out. But from the hundreds of conversations with other founders, partners, investors, and people across the ecosystem it became clear that this was the right moment.”
– How will GetVantage develop over the coming years?
“We are expecting the year 2021 to be a milestone year in so many ways as a result of the strong traction we are seeing across the board from customers, partners, and investors both domestic and international. The tremendous momentum is also due to various macro factors including the widespread digital transformation for businesses, a discernible shift from offline to online consumption trends, an explosion in home-grown direct-to-consumer brands, and exponential interest in our revenue-first alternative funding model.
“We are deeply committed to using our proprietary tech stack and data-driven approach to eliminate bias and make decisions based on performance and potential and become the funding partner of choice for more women entrepreneurs. India is our primary focus at present but with the total market for consumer brands in South East Asia expected to grow to over $400 billion by 2023, we are already looking to expand our operations into these markets in the next 12-18 months. Both customer and investor interest from other markets simply mean it is something we are looking at and working towards.”
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