The last couple of weeks have seen what we think of as alternative capital formats, for example revenue-based financing, really go mainstream in tech. There are plenty of new entrants to the market. Companies with what might be considered little history are raising crazy amounts of money in equity and debt to deploy using the model - or variants of the models - a lot of us use (e.g., Pipe raised $250M, CapChase raised $125M, Wayflyer raised $76M, and the list goes on). This is interesting; lots of people think these “alternative” structures are well tailored only for impact investing. I (and several of you) have long maintained that these models work across business and company types. It seems the market is beginning to agree...and "beginning" might be an understatement

So I wonder: what’s going to happen in this market? Do Pipe, ClearCo, CapChase, et al have the underwriting chops to support the businesses they’re building? I happened to speak to a large credit fund manager recently who said he’d seen all of these technology-first companies, and he thought their technology-first approach was interesting, but that they couldn’t prove strong underwriting history or capability. Of course, credit folks manage risk differently from equity investors, so that’s not a huge surprise, but I thought that offhand comment was interesting. 

In any case, let’s call this what it is: alternative capital, and especially revenue-based financing, going fully mainstream. Remember when entrepreneurs didn’t understand what you do? I think those days are behind us. The noise that these companies make in the market can only help you, whether you are running a small impact fund, thinking about raising a fund, or trying to figure out whether these alternative structures work (spoiler alert: they do). Welcome to the new world, folks.