CFOs are Turning to Revenue-based Growth Finance – Here’s Why…

Gone are the days when the only source of growth capital was to sell equity to investors. In recent years, more options have become available for growth finance.

The growth of revenue-based finance provides options for SaaS founders to finance their business by using their revenue as collateral for a loan. These loan options are usually repaid with a percentage of monthly revenue at a set cost. As a result, SaaS companies can leverage recurring revenue with venture debt to grow their business without dilution of their equity held in the business. There are many options to choose from; however, the best ones are flexible for the business needs and come with no warrant, personal guarantees, or equity dilution.

Revenue-based financing takes shape in a variety of ways and structures, depending on the provider. We advise founders to choose the best fit for their business by matching the type of finance with how they need to use it. For example, short-term loans should be used to fund short-term growth or to smooth out working capital fluctuations. For longer-term needs such as building a sales or marketing team, a structure of 3 – 5 years is going to work better.

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