Revenue-Based Financing
Definition
Revenue-based financing (RBF) provides capital in exchange for a percentage of future revenue. Repay from revenue, not equity dilution.
Extended Definition
How it works: Investor gives $500k, you repay 10% of monthly revenue until cap (typically 1.3-2x). No equity given up. No board seats. Repayment speed depends on your growth. Benefits: no dilution, flexible payments, faster than VC. Drawbacks: expensive (effective APR 15-40%), requires existing revenue. Best for: profitable SaaS, e-commerce, services businesses that do not want to raise equity.