I've been running a private label Amazon store for about two years now. Revenue is around $40k/month, margins are decent but I'm maxed out on cash. I need maybe $150k to scale inventory and launch a couple new SKUs. Every investor I talk to wants 40-50% equity. That feels insane. Is there any way to get funding without giving up control like that? Has anyone here raised money on better terms?
Amazon FBA
I want an investor for my Amazon store, but I don't want to give away half the company
Look into revenue-based financing. Companies like Clearco or Wayflyer will advance you money against your sales. You pay back a percentage of revenue until you hit a cap. No equity given up. Interest is high but for inventory scaling it can work.
What's your current debt situation? If you have no loans, a small SBA loan or a line of credit from a local bank might be an option. $150k is not huge.
I looked into revenue-based financing for my own store. The effective APR was over 40%. That's fine if you're turning inventory fast, but if your growth slows you can get stuck. Just read the fine print
Agreed. Wayflyer quoted me something like 30% APR equivalent. It's not cheap but it's cheaper than giving away half your business.
40-50% for $150k on $40k/mo revenue? That valuation seems off. Either your margins are worse than you're saying or you're talking to the wrong investors. Have you tried talking to smaller operators in your niche?
Maybe a convertible note with a cap? You could raise $150k with a valuation cap that doesn't require giving up board control. Still dilutes you eventually but not immediately.
Margins vary by SKU. Some are 35%, some are 15%. The 40-50% offers have all come from generalist investors who don't understand FBA. I haven't tried a convertible note yet. I'll look into that.
Would you consider seller financing on inventory? Some manufacturers will let you pay net 60 or net 90 if you've got a purchase history. It's not equity but it frees up cash
Or use Amazon's own lending program if you're eligible. They offer term loans based on your sales history. Rates are not great but they don't take equity.
Before you take Any debt, make sure your inventory turns are where they need to be. If you're sitting on slow-moving SKUs, more money won't fix that.
One more thing: if you do go the equity route, don't give up voting control even if you give up economic percentage. Non-voting shares are a thing.