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Decathlon offers revenue-based financing for media

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Mar 19, 2024
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Revenue-based financing firms like Decathlon Capital Partners have eyed media companies in podcasting, gaming and billboards as investment opportunities, its co-founder John Borchers tells Axios.

Why it matters: The funding source is an alternative to the pressure that can come from venture capital or the sheer lack of access for media startups unwilling or unable to meet their demands.

Driving the news: Decathlon recently funded sports podcast company Blue Wire with a five-year period to pay down the borrowed money.

Zoom in: Borchers says he co-founded Decathlon in 2010 after working at a venture capital firm and seeing companies passed over for myriad reasons like being smaller-scale or the founders not wanting to give up control.

  • Decathlon is on its seventh fund with $800 million in assets and has worked with about 250 companies. It typically provides anywhere from $1 million to $15 million.
  • The firm has 15 employees, with Borchers based in Palo Alto and others in Salt Lake City, Phoenix and Denver.

How it works: Companies agree to pay a percentage of their monthly revenue in exchange for funding. Good candidates for revenue-based financing have product market fit, known customer acquisition models and consistent, repeatable visibility of growth, Borchers says.

  • "They've done the hard work. They've taken the risk. They've operationalized something," Borchers says. "It's really a process of wash, rinse and repeat."
  • Decathlon does not take a board seat or involve itself in governance.
  • Its average company is about 6 years old and typically involves a seasoned operator. Minimum revenue is $4 million.

Between the lines: Digital media firms like BuzzFeed and Vice Media accelerated their growth with venture capital money but then struggled to meet lofty valuations, bringing an end to that era.

  • Revenue-based financing can allow a media firm to delay or forego an equity round. Borchers says his firm has increasingly been supporting venture-backed firms while that previously was not their focus.
  • "It's much healthier for everybody to just be realistic about growth rates," Borchers says. "You don't have to go all or nothing in terms of trying to have some crazy-big outcome."
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