What is revenue-based business finance?
It is a type of business financing in which funds are provided in return for a fixed percentage of ongoing gross revenues. There is no fixed interest, payouts to providers of funding fluctuate based on actual revenues of the funded business. This revenue is typically measured on a daily, monthly or quarterly basis. The duration of the financing might be variable because of that, but usually repayments continue until the initial financing amount plus a multiple (or a cap) is reached. Revenue-based financing is also called royalty financing. In the mineral resources sector durations traditionally tend to be higher and can last over the lifetime of a production spot. Unlike a bank loan, this type of financing does not require collateral. It may look similar to equity as it is being remunerated as a part of revenues. However, no transfer of actual equity happens as a result of revenue-based financing even if it seems to be initially similar to equity financing. There might be a requirement of backing up RBF with some kind of security. Unlike traditional loans, that security interest would rather consist of current assets, not equity. Current assets are a much more readily monetizable part of business. There is no requirement for business owner’s personal guaranty or pledge of personal assets. If compared to venture capital financing, RBF requires no business valuation exercise; access to financing is much less complicated as a result. No collateral from the owner’s personal assets is required either. Overall, revenue-based financing is more founder-friendly than other available types of financing and does not cause the owner to dilute his stake in his business.
What is Mercantus?
It is a project finance platform built on Ethereum. It matches providers of funding with businesses who need funding, in which borrowers remunerate lenders with a percentage of monthly (quarterly / yearly) business revenue. Revenue-based financing is sometimes also called royalty financing. It works well for businesses with stable revenue streams. No collateral is required as opposed to traditional loan. The total cost of such financing is variable and depends on the underlying contracts. In mineral resources payouts tend to be higher because of the overall risk of geological prospection and can average 3-5 times the initial funding amount. In technology or small-medium business ventures it starts from 1,25 the initial funding amount. Loan sizes are also variable and can range from EUR 25 000 to EUR 5 000 000. The percentage of monthly revenue to fund providers is variable, ranging from 3-5% in monthly revenue, and up to 12,5-15% in mineral resources, oil and gas. The duration of the funding is not capped: the faster the business grows, the quicker the funding is repaid. This type of funding is flexible and less risky: it allows a project owner to make its monthly payout proportionate to its gross revenue.
Is Mercantus truly decentralized?
Absolutely. Mercantus is built as an automated platform built on a set of Ethereum smart contracts. Every user transaction is written to Ethereum blockchain. Decentralized Web 3 applications need a connection to the blockchain which is ensured by a piece of software called “wallet”. It generates pairs of cryptographic keys for the user (public key and private key), and scans blockchain registers in search of pertinent records for its owner (s). All such records are stored for perpetuity in a decentralized database, in our case, Ethereum. We are also building an ultra-secure custody solution for all users of our platform. It will offer bank-grade security coupled with the easy key and transparent cryptographic keys management for organizations.
How can Mercantus benefit me more than other on-line funding providers?
Mercantus offers funding options that are very flexible: a user can customize smart contracts for his own token. It is very easy and straightforward. In Issuers' space, a user will find token administration options for corporate setting. They are compiant with usual audit requirements. Mercanuts offers a set of communication and marketing tools to publish your project on the platform, communicate with token holders and post your project on the most popular social networks. You can decentralize your token issuance but centralize your marketing effort - all on one single platform.