Revenue-based financing, sometimes known as royalty-based financing, was used by oil investors in the early 20th century to finance oil and natural gas exploration, and later by the pharmaceutical industry, Hollywood, and energy companies. Investors began applying it to early-stage companies in the 1980s. Revenue-based financing blends the best of bank debt and venture capital, and a company should expect the cost of capital to fall within that range.

Our revenue-based financing model (also known as a RevenueLoan®) is best suited for companies that are currently generating at least $200,000 in annual revenue. We require an average of $15K MRR over your last three months. If you’re a pre-revenue startup, you can still apply online so that we can keep you on our radar.

Our revenue-based financing model is best suited for software, SaaS, tech services, digital media, and similar companies. For entrepreneurs in these high-growth, high-margin markets, Lighter Capital’s revenue-based financing is a new way to raise growth capital without giving up equity. Entrepreneurs in industries with inherently more hard assets (i.e. collateral) will generally find that there are existing sources of capital that are better suited for their needs. Those industries include real estate, food and beverage, manufacturing, construction, and related services.

Currently, Lighter Capital provides funding to companies in the United States, Canada, and Australia. In the future we plan to offer funding to companies based outside of those countries.

We’re currently offering $50k-$3M in growth capital to qualified companies. You can qualify for a loan for up to 33% of your annualized revenue run-rate. For example, if you are on track for $1M in sales this year, we can invest about $330k. More about revenue-based financing.

No. Lighter Capital provides revenue-based financing, which means we give you unrestricted capital for growth in return for a small percentage of monthly revenues. “Factors” or “receivables financiers” basically speed up the cash flow from sales that already happened (or are just about to happen). Factoring provides working capital; revenue-based financing is growth capital. It comes with fewer restrictions and impositions on your workflow, and is paid monthly compared to daily or weekly, as with factoring.

We will ask for a percentage of revenue (usually between 2% and 8%, never more than 10%) until the total repayment cap is reached. Generally, this is calculated and debited monthly via Automated Clearing House.

Unlike a traditional loan, revenue-based financing doesn’t have a set payment amount each month. Instead, you pay a percentage of topline revenue. If you beat your plan and grow faster, your payments go up accordingly, but if you miss your plan, your monthly payment goes down.

No. Payments stop when the return cap has been paid back. RevenueLoans® are normally repaid over 3–5 years, but if your revenue grows faster than expected, you can pay off the loan sooner.

While you may pay back your loan (plus return cap) at any time, there is generally no incentive for paying back the loan early. We may make an exception if you expect a special event (a VC round, for example) within the first year.

No. Angels and VCs tend to respond positively to revenue-based financing. It gives your company more leverage without diluting equity, which future investors like for two reasons

  1. It makes the pie bigger for them.
  2. Having fewer early-stage investors means there’s more pie to go around.

There’s also no valuation event, which helps keep things simple.

Many of our clients have used our funding to scale their companies and earn better term sheets from prospective investors, and many of our clients have gone on to raise VC funding.

First, we congratulate you on your hard work paying off! Second, you as a borrower would have a repayment commitment to uphold, which in the case of an acquisition can be done by “buying us out” of the remaining debt.

Lighter Capital’s team has many years of experience funding and scaling startups. Many of our clients who have gone on to raise venture funding made their first connections at VC firms through the Lighter Capital leadership team. If you have a question or problem, chances are someone in the Lighter Capital community has been there before and can help you. Both our team and our community are very supportive, and will help you in any way we can.

A Lighter Term Loan is a non-dilutive alternative for startups looking to quickly access up to $1M in growth funding. The Lighter Term Loan is structured as a standard loan with fixed monthly payment amounts that is paid back over a predetermined time frame consisting of a fixed monthly principal amount plus all interest that was earned on the existing loan balance the prior month.

During the application process, we will determine if you also qualify for a forward commitment in addition to a Lighter Term Loan, giving you immediate access to additional capital in the future without having to reapply.

A Lighter forward commitment is a pre-approved commitment by Lighter to provide an additional amount of funding to a company in the future. If you are interested in a forward commitment, the Lighter team will assess this during the application process for the Lighter Term Loan.

The minimum qualifications we look for include:

  • Tech companies (Software, SaaS, tech services, etc.)
  • Monthly recurring revenue (MRR) is an average minimum of $15,000
  • Based in the U.S. or a subsidiary in the U.S.

A Lighter Term Loan provides startups with a greater degree of downside protection via a higher probability of payment default if the business is having operational issues. The repayment of the Lighter Term Loan is a fixed monthly payment with a relatively fixed cost of funds—allowing you to better manage operational costs while pushing for growth.

In comparison, a Lighter Revenue-Based Loan gives borrowers more flexibility with variable monthly payments based on monthly net cash receipts—adjusting for the ups and downs of your company’s performance.