The video below is a very informative presentation on the rise of Revenue Based Financing by Harvard PhD candidates that is a must watch for anyone in the space regardless of experience level as it explores the positive impacts of flexible finance. It gives a high-level overview of the product and then drills down to details like how merchants try to avoid repayment and different contract structures that are used across the globe.
In their research paper they focus on two key questions:
1) How do FinTech platforms’ non-lending interactions with small businesses affect classic contracting frictions in lending?
2) Under what circumstances will these platforms be more or less successful in mitigating these frictions?
These questions are important for evaluating the long-term potential of FinTech platforms as small business lenders (funders) and the extent to which they can more efficiently provision capital than traditional lenders.
The study is based on US, European, and African fintech providers such as Square, Toast, Shopify, and Velocity. This global view should help those who work for direct Funders with information that may not otherwise be available.
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