Happy Sunday, friends. Today I want to highlight an article by our friend, Martin MacMillan from PollenVC. You can watch our Speaker Series conversation here, where we talk about how he brought revenue based financing to the gaming space. 

In his article, Martin explains how an entrepreneur should think about taking a revenue-based financing loan. Martin’s article is focused on the mobile gaming industry, but the analytical framework he shares is exactly how entrepreneurs in any industry should think about taking RBF (or any loan, for that matter).  

This is excellent advice, and it amplifies and simplifies concepts that we have talked about a lot in the past couple years (i.e., are these Capchase and Pipe structures good or bad for companies?). Most early stage entrepreneurs don’t understand how to model the cash flows associated with short-term payback streams, which puts them in a bad spot: they end up using the cash from their short-term loan to pay back that very loan because their LTV doesn’t match their payback schedule. We see it all the time, and I suspect you do too. 

Check out Martin’s article here.