Investors don’t believe they’ll make money on you.

Worse, they fear losing their investment more than they long to strike it rich.

They’ve seen most deals go badly so they’re extra skeptical, and the ones that do return take a long time.

Nevertheless, they’re interested in betting on a good opportunity. And that can be your business.
But if you don’t have a plan with some kind of timeline and an ROI that they believe…
Your deal is DOA.

If you’re having trouble selling stock in your company…

Your problem may not be you or the investors; it may be that your chances
of a profitable exit (sale of the company) in the next few years is low.

Here’s your hidden problem:

Selling stock now eventually requires an exit enabling investor to cash out.
That means for investor ROI, you have to sell your business at some point.
But what if it’s a good business you want to keep longer, scale it more, build it bigger?
What if you could just grow your company and never be pressured by investors to sell it?

So, you must find an alternative and a way to attract investors to it…
Investors who buy stock have many options for huge returns in the future from higher-flyers.

If your company is a growing generator of cash from sales with positive margins now or planned,
but not yet a high-flyer, there is another option.

Are you aware there is a class of investors who prefer cash-flow rather than a big (but very risky) possible return many years from now?

These investors have a lower risk tolerance than most stock-buyers.
And they’re out there; they’re waiting for you. For example…

Kevin O’Leary, aka “Mr. Wonderful” on ABC’s The Shark Tank, is a Canadian businessman, investor, and TV personality with a net worth of about $400 million. His nickname, coined sarcastically by co-star Barbara Corcoran in Season 1, reflects his blunt, often harsh demeanor, which he uses to test entrepreneurs’ resilience.

O’Leary’s investment strategy on The Shark Tank prioritizes low-risk, cash-flowing deals with predictable returns, shaped by his experience selling his educational software company, SoftKey, for $4.2 billion in 1999 to Mattel.
Here are the key aspects of his investment preferences:

 

Revenue-Based Financing

• O’Leary is renowned for favoring royalty deals, where he loans money in exchange for a percentage of future revenue rather than taking equity in the company. This approach minimizes his risk by ensuring returns regardless of the company’s long-term success or exit potential. He often seeks royalties on consumer packaged goods (CPG) or single-product companies with limited exit prospects, as these deals provide immediate cash flow.
  For example, he might offer $300,000 for $5 per unit sold until he recoups $1 million, plus a small equity stake. Entrepreneurs often resist these deals due to margin pressure, but O’Leary sees them as low-risk and high-reward for himself.
• He justifies royalties by noting that Shark Tank exposure drives a surge in orders, allowing him to recoup investments quickly.
  This strategy aligns with his dividend-focused investing philosophy, where he prioritizes steady income over speculative growth.

Low-risk, High-dividend-yielding investments

• O’Leary avoids investing based solely on liking a product, focusing instead on financial metrics like low volatility,
  high margins, and consistent cash flow.

Preference for Women-led businesses

• O’Leary has stated that 85% of his Shark Tank returns come from companies led by women,
  citing their risk mitigation, realistic goal-setting, and multitasking abilities.
  This bias has led him to invest heavily in female entrepreneurs across various industries.

Examples of investment outcomes

• O’Leary has invested over $8.5 million across 40 companies in 131 episodes, with deal sizes ranging from $35,000 (PaperBox Pilots) to $2.5 million (Zipz Wine).
• Every rev share payment made is a little more risk relieved.
• Some investors are aging and don’t want to wait for your someday sale at will make them rich.
  This deal pay them back sooner. And it could just be your competitive edge with investors.

It’s working for him

Kevin O’Leary, as Mr. Wonderful, is a disciplined, cash-flow-focused investor who prioritizes royalty deals, women-led businesses, in recession-proof sectors. For entrepreneurs, securing his investment means gaining not just capital but also a rigorous mentor who demands financial discipline.

With Mr. Wonderful leading the way, there are many such investors just waiting for you and your company.

 

How to make Revenue-Based Financing work for you

If you have a good profit margin, what if you were to offer people
a small percentage of your top line sales as a “revenue royalty?”

You’re not selling shares in your company.
You’re not offering any management control or board participation.

There doesn’t even have to be a board or even a corporation.
Profitability and valuation have no effect on their return.

It’s simple, for whatever your sales are for the month, they get a small percentage.

It could be a 10th of a percent.
It could be 10%. Or anything in between.

Either way, no matter what you do otherwise, there’s just ONE number that matters.
Sales. And they get a piece of just that.

What you get

Of course you get their cash…

I’m sure they’ll get behind all the marketing you can do because
that increases the top line that they get paid a percentage on – the revenue.

They’ll likely do whatever they can to promote your business.
Win win?!? Yes.

 

Revenue-Based Financing Terms

You can even adjust the amount of time that your Revenue-Based Financing lasts.

For example, “We plan to offer to repay investors at a rate equal to [5]% of monthly sales until [100]% of their investment is returned, from there they earn [3]% of sales revenue until [150]% of their investment is returned.
From then on they earn [1]% of all of top line sales for [10] more years.”

From the investor’s, perspective Revenue-Based Financing is more attractive because:
(1) Revenue share is not impacted by the reported profitability of the company generating the revenues; and
(2) investors own a percentage of the company’s revenues, but not the company itself.

Therefore, contentious issues of executive compensation, company policies, and a range of matters usually confronting equity investors are not of concern to the Revenue-Based Financing investor. The royalty investor is very much focused on sustainability of the company, and the Revenue-Based Financing Agreement will address investor remedies and protections.

If the company seeking funding becomes successful, the original shareholders will regret having used equity related securities to raise the required capital if there had been royalty investments available. The recommended issuer’s Right of Redemption allows for the company to terminate the royalty.

Join Us this Wednesday for a Free One-Hour Discussion

We can help.

Rob Kramarz is a managing partner of Shepherd Ventures III, a venture capital fund whose claim to fame is investing in the founders primarily.
See https://sv3.vc .

Burke Franklin is the originator of the first business planning software called BizPlanBuilder® the Creator and CEO of Business Power Tools, a secure, collaborative online platform loaded with self-guided, customizable software-driven document & spreadsheet templates.

It’s deal for growth-minded entrepreneurs, business owners, and advisors who need proven, ready-to-use documents and financial models to raise capital, systematize operations, implement policies & procedures, or stage their business for sale, especially to present a professional, believable business plan to investors, lenders, or buyers.

It’s more practical today than ever. You’ll become addicted to the clarity and congruency throughout your entire business. More about Burke here.

You Can Do This, We Can Help

Between us, we can work together to design, engineer and finalize a Revenue-Based Financing plan that you can use quickly and put the fun back in funding.

What you need is to calculate the exact percentages, a standardized legally-approved contract for investors, and an executive summary describing the terms.

Let’s set up your Revenue-Based Financing program
with our Revenue-Based Financing Toolbox & Training.
You’ll get everything you need to get started including:

• The book The Road Less Traveled on Revenue-Based Financing by Mr. Kramarz
• How to find investors.
• A template Email intro to Investors
• A template Revenue-Based Financing agreement
• A template Revenue-Based FinancingExecutive Summary
• A template 3-minute Investor “teaser” pitch
• A Revenue-Based Financing calculation spreadsheet
• + a Straight-forward online Training (About 3 hours)
• $147 one-time investment

Click here for our training webinar so that you can get started ASAP.

Revenue-Base Financing Toolset + 3-Hour Zoominar™ Training: $147

If you want further assistance, let’s discuss it after the webinar.

Get Up-to-Speed on Revenue-Based Financing

The better way to finance innovative business.

Not ready for the training?
Learn the background first.

Read The Road Less Traveled and discover the most important thing you also need, how to get it, and how to make it work for you.

I Want to Learn More about Revenue Royalties: $10

Free Sessions Included with your book…

Join us Wednesdays at 11:00 Am Pacific / 1:00 Pm Central / 3:00 Eastern
We’re offering a free one-hour discussion on Revenue-Based Financing.
Will they.. and how will they work for you?

Grab the book.
You’ll get the calendar link to the free session.

Get started now. Put your plan to work for you ASAP.
Ideal for Growing your Company / Strategic Planning / Growth Financing

Blow the Socks Off My Investors.

Join Us this Wednesday for a Free One-Hour Discussion