To provide effective disaster recovery, remote monitoring, and management, cloud services, security services, or other general managed IT services, small businesses need capital. By necessity, small MSPs work with services partners and need data centers, all of which requires capital.
However, it can be difficult to find funding options that will benefit your company in the short and long term. There are very few options that don’t strip you of some control. Our experienced team understands that not all managed service providers investments produce positive results. Here are a few options that you should consider.
One of the main funding options for a growing business is venture capital. Venture Capital for managed services offers you the ability to obtain significant amounts of capital, but that capital comes with plenty of strings attached. An investment from venture capitalists or a private equity firm usually results in the business owners losing equity and some control of the company.
Unfortunately, it is particularly difficult for growing mid-sized businesses in the managed services industry to obtain venture capital. That’s where This TechTarget article shares that it is usually easier for a small company to raise $1 million or a larger company to raise $10 million than a medium-sized company to raise $5 million.
Venture capital can work well for new, small or larger businesses, but does not work well for medium-sized companies looking to get over the mid-sized hump.
A MSP can also seek an angel investor to provide their company with capital. Generally, an angel investor that partners with a MSP already has significant business experience. It is very likely that they have experience in your industry, which should make them an excellent mentor.
While angel investors usually do not require repayment, they typically cannot offer the quantity of capital that a growing MSP business needs. Most angel investors also require some sort of control or equity in your business, which is not desirable.
There are alternative ways to receive capital, but they carry significant drawbacks. While bank loans have low interest rates, it is almost impossible for startups to obtain them. Getting one a bank loan is complicated and time-consuming. Crowdfunding can provide some capital as well as advertising, but there are no guarantees that you will get the capital you need.
What if your MSP needs significant capital and doesn’t want to sacrifice control or equity? That’s where RevTek comes in.
RevTek Offers Superior Funding for MSPs
Venture capital, angel investors, and even bank loans can get your Managed IT company the capital it needs. However, all of these options result in you losing board members and control of your company.
At RevTek, we care about the long-term success of your company, which is why we don’t take any control or equity away from you. Giving away control should not be a requirement for getting the capital you need to grow.
RevTek offers the best funding for MSPs. Our experienced team understands industry trends, as well as M&A activity, which more than qualifies us for Managed IT funding. We offer growing MSPs the best funding available. As long as you have a strong business model, a recurring revenue of at least $25,000 a month, and good cash flow, you can utilize our funding options.
Our revenue-based financing allows us to provide you capital in exchange for a percentage of your future revenue. By focusing on future revenue, we avoid taking any equity or control. We create a repayment system based on your monthly recurring revenue stream.
Our process and terms are simple, and you can obtain as much as $2 million in growth capital. Whether you need to improve your sales and marketing approach and tactics, develop new products or equipment, or create new technological services, we can provide the capital you need to grow your business.
More flexible than the bank
We lend more to early-stage growth companies
Interest rates can be lower for bank loans than for revenue-based financing, but beyond small lines of credit, banks rarely lend enough for early-stage growth.
Bank loans contain complex covenants that can be difficult to navigate.
Monthly payments rise and fall with the ebb and flow of your revenue
Your monthly payments
Revenue loan rate
Monthly net cash receipts
Payments adjust to what your business can afford.
The payment rate is always below 10% to minimize the impact on your cash flow.
How fast you repay your loan depends on how fast your business grows
Our loans are normally repaid over 3–5 years, but if your revenue grows faster than planned, you can pay off the loan sooner.
Banks, on the other hand, can make it very difficult or expensive to terminate a loan early.
Far cheaper than equity
Our revenue-based financing uses a simple, transparent pricing model so you know your total commitment from day one
Revenue-based financing has two costs:
A repayment cap,
Minimal legal expenses (usually around $3,500),
The repayment cap is calculated as follows:
Cost of funds
The cap is usually 1.3–1.8x the amount borrowed, paid back over the length of the loan (usually 3–5 years).
Venture capital is not free—in fact it is vastly more expensive in the long run.
The equivalent “payment cap” for venture capital can be 10–20x the amount they invest in you—or more.
And initial legal fees and expenses can easily reach $30,000.
Funded More than 27 Growing Technology Entrepreneurs
As an intermediary, I have had the opportunity of working with the Principals regarding the financing needs of operating companies which I represent. They are very proficient at, being able to "Peel the Onion Back" in analyzing a particular financing need to come up with solutions that would meet the needs of my clients seeking financing. With it being a flat organization, you are always talking directly with the decision makers who are very responsive in their communication of: How to get to a deal or we do not see this fitting into our lending model.
Thunderbird Corporate Finance, LLC
RevTek Capital has evolved into more than a financial partner for our company. While their financial acumen is evident early on, the long term benefit RevTek Capital offers is the ability to dig into the operations side of your business and offer a fresh perspective or a new connection that can further your business. If you're getting started and want a big value add to your financing, RevTek Capital is an excellent choice.
WISPer Ventures / REVTEK Capital went to bat for us early on and has proven to be a great financial partner throughout our record historical growth. They went the extra mile to really understand our business early on, when other lenders simply wouldn’t.
In addition, they have proven to be much more than a direct financing source by helping us raise additional capital from outside sources to further accelerate our growth.
If you are an early stage company seeking growth capital with an objective to minimize dilution, WISPer/REVTEK is the perfect choice.