Questions we get asked frequently.
How can I get in touch to discuss potential funding for my startup?
You can reach out to us through our website's contact page. Please provide a brief overview of your company and its potential, and our team will review and get in touch.
How can I improve my chances of receiving funding from Capital Mills?
To increase your chances, ensure you have a clear and compelling business plan, a strong and adaptable team, a well-defined market opportunity, and a solid demonstration of progress and traction.
Should I apply for equity or RBF?
If you now what you want - that's great. If you are not sure about your funding plans, do not hesitate and discuss. We are happy to share our opinion. Generally speaking, equity is the most expensive form of capital and can best be deployed for companies that follow a VC (moonshot) strategy or to fund a secondary transaction. RBF is perfect for relatively small growth investments.
What happens if my startup needs additional funding beyond the initial investment?
We're committed to supporting our portfolio companies throughout their growth journey. If your company requires additional funding, we'll explore options for follow-on investments or connect you with potential partners.
How involved do you get with the companies you invest in?
Our support extends beyond capital. We take an active approach and work closely with the companies we invest in. We provide mentorship, strategic guidance, and access to our network of industry contacts to help accelerate their growth and success.
What is your preferred exit timeline for investments?
Our exit timeline can vary depending on market conditions and the company's growth trajectory. Generally, we aim for an exit within 5 to 7 years, but we remain flexible to ensure the best outcome for both parties.
What is the typical ownership stake that Capital Mills seeks in the companies you invest in?
Ownership stakes vary depending on the stage of investment and the company's needs. Generally, we aim for a stake between 15% - 25%.
What are secondary investments?
Secondary investments, often referred to as secondary transactions or secondary sales, involve the buying and selling of existing ownership stakes in private companies. Secondary transactions offer flexibility and liquidity to investors, founders, and employees while providing new investors with opportunities to enter the private market.
Why would someone consider selling their ownership stake in a company through a secondary transaction?
Motivations can vary. Sellers might want to realize profits, diversify their investment portfolios, or address personal financial needs. Secondary transactions provide an opportunity to unlock value before an exit event like an IPO or acquisition.
What types of companies are eligible for secondary transactions?
We engage in secondary transactions with a diverse range of private companies, specifically scaleups, across various industries. We look for companies that are profitable and have more than €2M in annual recurring revenue.
What is revenue-based financing, and where does it stand in the funding landscape?
Revenue-Based Financing (RBF) is a funding approach that fills the gap between traditional loans and equity investment. It offers entrepreneurs an alternative to raising capital without diluting ownership. RBF is gaining prominence as a flexible financing option, especially for businesses with steady revenue streams.
How is RBF different from equity financing?
RBF does not involve giving up ownership or equity in the company. In equity financing, investors buy a stake in the business, entitling them to a share of ownership and potential future profits. RBF investors, on the other hand, don't acquire ownership; they share in the company's revenue until their investment is repaid.
Who is RBF best suited for?
RBF can be attractive for early-stage or growth-stage businesses that have consistent revenue streams but want to avoid dilution of ownership. It's often used by companies that are not yet eligible for traditional loans or find equity financing less desirable.
Can a business buy out the RBF agreement early?
Yes, many RBF agreements allow businesses to buy out the investor's share early, often at a predetermined multiple of the original investment. This can be beneficial if the business experiences rapid growth and prefers to regain full control of its revenue.
What is a repayment cap in RBF?
A repayment cap in RBF refers to the maximum amount a business is obligated to repay to the investor. Once the total amount repaid by the business reaches this cap, the RBF agreement is considered fulfilled, regardless of the percentage of revenue still being shared.
Can the repayment cap be tailored to a business's specific needs?
The repayment cap can often be customized based on the unique circumstances of the business, depending on the strength of the balance sheet, the gross margin and monthly installments.
What are the cost of RBF compared to equity?
Any equity investor will aim for a return (much) higher than 20% annually. So does Capital Mills. It's an investment in an uncertain future. With RBF, the predictability of future revenue is better, but growth is still uncertain. So the cost will be anywhere between 12% and 18% annually. Lower if your growth is moderate, higher if you grow faster (you will repay sooner).