The American payment startup is now offering its customers financing in return for a percentage of their sales. Royalty-based financing is booming in France.
What is royalty crowdfunding?
Crowdfunding has become particularly popular in France in recent years. It offers three main financing tools for businesses: donations, equity investment and debt. Since 2015, royalties have made it possible to meet the needs of French start-ups. This innovative and still little-known solution involves investors participating in a startup's fundraising and receiving a percentage of its sales in return. Royalty-based financing is therefore mainly aimed at companies in the seed phase, who have difficulty obtaining loans from banks and rarely reach balanced agreements with investors.
In France, WeDoGood has established itself as the leading player in royalty-based financing. More than 4 million euros have been raised via the platform from 4,500 investors. Since its launch in 2015, the company has doubled its business volume every year. Other players offering this solution include Vendée'Up and Mipise.
A financing solution for web companies
Founded in 2011 and based in San Francisco, Stripe, after conducting a survey of its 100,000 customers, found that the main difficulty encountered by web companies wishing to expand is access to financing. Traditional banks are unable to adapt to the specific needs of these companies.
The fintech now offers to finance its customers in return for a percentage of their sales, deducted from transactions passing through the platform. This method of financing, which combines a return for the investor with ease of implementation, is highly attractive for businesses. The main advantage is that you can obtain funds without having to open up your capital.
Proof that this model is gaining ground in France, startups such as Royalti have recently started offering SMEs the opportunity to facilitate payment for services via royalties. In this way, companies can preserve their cash flow while building long-term relationships with their service providers.
Stripe's announcement follows the completion of a new $250 million round of financing with General Catalyst, Sequoia and Andreessen Horowitz, among others. The fintech, now present in 34 countries, is continuing its development and gradually expanding its product range. Its aim is to support companies of all sizes in their international business development. In the United States, the company recently launched two new products: Stripe Corporate Card, an expense management credit card for web-based businesses, and Stripe Capital, enabling companies to access the funds they need more easily.