by: Grow VC Group
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We recently had the pleasure to speak to Jori Kartikko, CEO of List71. Unlike other equity crowdfunding platforms, List 71, based in Singapore, adopts a revenue sharing approach to crowdfunding.

What was your motivation behind starting a revenue sharing investment platform? Can you explain to us the basic mechanics behind this new model? 

The financing gap in Europe alone was 250 billion in 2014 (Duedil). The power of crowdfunding is potentially substantial but is private company investing in equity and lending always the best way? No.

Investing in private companies is risky, difficult to value and assess – even for professionals who work in the field day-to-day. Equity yields high risk for potentially high reward, and loans possess much lower risk for low rewards. Reaching common ground in valuation tends to be difficult, in almost all cases the entrepreneurs are much more optimistic about the valuation than the investors, therefore entrepreneurs are not keen on equity dilution. And finally, the average “exit” occurs in 8-10 years with little to no liquidity.

Is there a financial instrument where investors can take on moderate risk in order to achieve moderate rewards?  Yes. Revenue-based financing (RBF) a.k.a “royalties.” RBF is not a new concept; however, it’s only accessible to a few investors. List71 is the first to introduce RBF in the crowdinvesting spectrum.

How does RBF actually work? In exchange to an investment, investors receive a percentage of the company’s revenue until the investor has received the investment multiplied by the money multiplier back in full. Investors have access to a company’s monthly revenue, statistics, pitch, team and the offering.

How is revenue sharing different from the other type of crowdfunding models like equity, debt, etc? What are the pros and cons?

For Companies:

  • No equity dilution for Shareholders.
  • No loss of control for Entrepreneurs.
  • No collateral or warranties.
  • No valuations.
  • Fast hassle-free financing for growth.
  • Easy and simple “Exit” possibility.
  • Marketing and global presence.

For Investors:

  • More liquidity as payments are paid back monthly.
  • Shorter ‘Exit’ as the investment and interest is paid back within 5 years.
  • Lower Risk level as the revenue-share model ensures consistent monthly payments.

Read the whole article on DealIndex Blog.


Interested in reading more partner insights on the equity crowdfunding landscape? Please download DealIndex’s“Democratising Finance” research report.

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Grow VC Group The Grow VC Group is the world leading, global pioneer of securities crowd funding, peer to peer marketplaces, new investment models and global business development. Established in 2009, the Group has developed new investment models on six continents and continues to innovate the global market.

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This entry was posted on Tuesday, December 8th, 2015 at 10:00 pm and is filed under Business Updates. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.