Revenue-Based Financing

Increase your company’s growth where payments are based on your ability to pay. Best suited for companies with recurring revenue business models.

How It Works

Principal Amount

Average check sizes range from $1-5M

Monthly Payments

Monthly payments based on a percentage of top-line revenue

No Fixed Terms

The investee decides when they are ready
to buy out the investment

Typical Royalty Agreement Structure

Amount:

$1-2M first tranche; up to $5M in total

Monthly Payment:

Minimum payment or a percentage of revenue

Buyout Options:

You control; no fixed term

Control Features:

None

Financial Covenants:

Light

Warrant Coverage:

Light

Security:

Secured or unsecured

Benefits of Revenue-Based Financing

An attractive financing option for companies with recurring revenue models

Fuel Growth

Access growth capital with minimal equity dilution

Extend Cash Runway

Extend cash runway to achieve the next milestone

Increase Valuation

Bridge to the next round of financing at a higher valuation

Minimize Equity Dilution

Achieve a more balanced and less costly capital structure

Flexible Payments

Payments based on a percentage of your monthly revenue

Aligned Focus

Shared goal between the investor and company towards sustainable revenue growth

Who Should Apply for Revenue-Based Financing?

Revenue-based financing is best suited for SaaS or subscription-based businesses with plans for fast growth.

Revenue-based financing is not startup financing – it’s growth financing. While RBF lenders do not expect the 10X returns VCs do, this financing structure is best suited for companies with sticky revenues and high growth aspirations.

Seeking:

$1-2M first tranche; up to $5M in total

ARR:

At least $2.5 million; or generating annual revenue of at least $4 million

Regions:

United States
Canada
United Kingdom

Sectors:

Primarily technology;
Open to high-growth companies in other non-tech sectors

Management:

Proven entrepreneurs with substantial ownership positions in their own businesses