Revenue-based financing (RBF) is non-dilutive capital repaid as a percentage of revenue. A practical guide to when it fits and when it drags.
Revenue-based financing has quietly become a real option for founders with predictable revenue. It sits between venture debt and equity, and it fits a specific kind of company well.
A lender advances capital — typically $100K to $5M — and takes a percentage of monthly revenue (2–10%) until a fixed multiple of the advance (typically 1.3×–2×) is repaid. No interest rate, no equity, no board seat.
SaaS with $30K+ MRR and stable retention. E-commerce with consistent ad-driven revenue. Anyone with real revenue and a use of funds that clearly generates more revenue (paid acquisition, sales rep hires, inventory).
Pre-revenue companies. Companies with lumpy or seasonal revenue. Deep-tech or hardware in R&D phase. Companies whose next dollar of capital doesn't clearly produce next-quarter revenue.
A 1.5× repayment on $1M in 24 months is roughly a 25% effective annual rate. Cheaper than equity for a high-growth company, more expensive than bank debt. The real question is what a comparable equity round would cost in dilution.
The strongest pattern: raise a small equity round for team and product, then use RBF for growth channels that have proven ROI. This keeps founder ownership high and matches capital shape to spend shape.
Overestimating revenue growth means the repayment period stretches and the effective rate climbs. Stacking too much RBF starves growth cash. Some RBF contracts include revenue floors — read them carefully.
Pipe, Capchase, Wayflyer, Founderpath, Uncapped, Lighter Capital. Each has different underwriting, revenue thresholds, and repayment structures. Get quotes from 3+ before committing.
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