The New VCs: Revenue-Based Versus Shared Earnings

A plethora of new-fangled venture capital firms have emerged, but how are they different?

The tides are turning. That is, non-dilutive. No longer are startup founders limited to traditional venture capital that gives only a 1% chance of “success.” Entrepreneurs are in revolt and paying attention to new models of financing that give them refreshed optionality when looking to fund their growth.

In a recent New York Times article titled More Start-Ups Have an Unfamiliar Message for Venture Capitalists: Get Lost, Josh Kopelman, a venture investor at First Round Capital and an early backer of Uber, Warby Parker, and Ring, explained he was happy that companies were embracing alternatives to venture capital. “I sell jet fuel,” he said, “and some people don’t want to build a jet.”

If you were raising a seed round to build a jet-like product in the past decade you’d probably be looking at either angel investors or seed-stage venture capitalists. If you didn’t go the traditional route of VC you might have bootstrapped or taken money from family and friends. In the last 10 years, you also might have even looked at raising via a crowdfunding campaign or, dare I say it, an ICO.