Vienna — Round2 Capi­tal, the Vienna-based growth finance invest­ment fund and Euro­pean pioneer in reve­nue-based finan­cing, closes the first quar­ter with seven invest­ments. The exis­ting port­fo­lio of 13 compa­nies will thus be expan­ded by tech scale-ups from Germany, the UK, Austria, France and Sweden. Chris­tian Czer­nich, Round2 Capi­tal foun­der and CEO, explains why the alter­na­tive finan­cing form of reve­nue-based finan­cing is so in demand right now.

The first quar­ter ended parti­cu­larly successfully for the Round2 Capi­tal team: 7 new compa­nies now expand the port­fo­lio of the Vienna-based invest­ment fund, which is prima­rily dedi­ca­ted to reve­nue-based finan­cing. Invest­ments are made far beyond natio­nal borders and scale-ups from Germany, Sweden, Great Britain, France and, of course, Austria are welco­med into the family of port­fo­lio compa­nies. The new invest­ments are:

Logsta (AT), next-gene­ra­tion soft­ware-enab­led logi­stics company with warehouse loca­ti­ons in Austria, Germany, the UK, France and the US.

Projekt­eins (DE), B2B soft­ware plat­form for the inte­gra­tion of various e‑commerce applications.

Dracoon (DE), cyber­se­cu­rity busi­ness cloud with the highest encryp­tion standards.

Hamil­ton Apps (FR), a leading work­place tech­no­logy provi­der offe­ring a wide range of solu­ti­ons within a single inte­gra­ted platform.

Sales Impact Academy (UK), an e‑learning plat­form for B2B salespeople.

Subscrip­tion-based sports commu­nity (UK)

Inter­net Yield (SE), acqui­res, owns and opera­tes reve­nue-gene­ra­ting websites curr­ently selling 40 million ad impres­si­ons per month.

Round2 Capi­tal focu­ses on young digi­tal SaaS compa­nies that are in the growth phase and alre­ady employ 20 — 150 people. As a rule, these compa­nies have alre­ady reached the opera­ting brea­k­e­ven point. The majo­rity of the port­fo­lio compa­nies were able to reach this level without exter­nal finan­cing and are now pursuing a growth stra­tegy that enables growth even without high burn rates. The Round2 port­fo­lio includes e.g. the German cyber secu­rity company Myra Secu­rity, the Swiss EduTech scale-up Aval­lain or the Finnish, multi­ple award-winning scale-up Vainu, all of which have mana­ged to grow to a sales volume of between 5- 15 million euros without exter­nal equity financing.

Reve­nue-based finan­cing is a rela­tively new finan­cing instru­ment in Europe, which has been successfully estab­lished not least through the work of Round2 Capi­tal. The high­light of this form of growth finan­cing is that the company does not have to give up any company shares, as instead the fund parti­ci­pa­tes in the company’s sales until a prede­fi­ned repay­ment amount is reached. The monthly repay­ments auto­ma­ti­cally adjust to the company’s turno­ver and thus do not cause any cash flow problems. Since leng­thy nego­tia­ti­ons on company valua­tions are no longer neces­sary, the tran­sac­tion process is also signi­fi­cantly faster. All these advan­ta­ges make reve­nue-based finance a simple, flexi­ble and fully trans­pa­rent finan­cing tool.

The capi­tal provi­ded by Round2 is mostly used by the young compa­nies to expand sales, marke­ting and inter­na­tio­na­liza­tion. In other words, for measu­res that quickly lead to sales growth.

Today, Round2 Capi­tal mana­ges over 30 million euros from mainly entre­pre­neurs and family offices from Sweden, Germany, and Austria. Wher­eby plans are alre­ady under­way to open the fund to insti­tu­tio­nal inves­tors and signi­fi­cantly increase the capi­tal under management.

How Reve­nue-based Finan­cing Works

Reve­nue-based finan­cing consists of a subor­di­na­ted loan whose repay­ment is linked to the reve­nue of the company in which the invest­ment is made. This share is between 2–6%, depen­ding on the amount finan­ced and sales, and consists of both a repay­ment and a royalty compo­nent. The reve­nue share is paid until a certain multi­ple of the finan­cing amount, which is between 1.35x — 2.15x, has been paid. When this is reached after 4–6 years, the finan­cing auto­ma­ti­cally expi­res. The finan­cing volume is initi­ally between EUR 500,000 and EUR 2 million and can be gradu­ally increased to over EUR 10 million by supple­men­ting it with equity. Since in some cases it can be well combi­ned with an equity invest­ment and even replace it, Round2 Capi­tal selec­tively also offers a combi­na­tion of these two invest­ment models.

The advan­tage of reve­nue-based finan­cing over other venture debt finan­cing is that repay­ments are linked to sales and thus to the company’s cash flow. In this way, this cannot become unba­lan­ced due to the repay­ment obligations.

About Round2 Capi­tal Partners
Round2 Capi­tal is a fast-growing Euro­pean invest­ment firm with over €30 million in capi­tal under manage­ment. Based in Vienna, Berlin and Stock­holm, the company is a strong part­ner for Euro­pean scale-ups with digi­tal and sustainable busi­ness models. Since its incep­tion in 2017, Round2 Capi­tal has been pionee­ring reve­nue-based finan­cing in Europe and is active in seve­ral Euro­pean count­ries, with a focus on Germany, Switz­er­land, Austria, UK and the Nordic count­ries. To date, Round2 Capi­tal has inves­ted in 20 diffe­rent compa­nies. www.round2cap.com