Revenue Based Financing
Revenue based financing is the friendliest way for startups to accelerate their growth, extend their runway and make strategic bets. It’s a type of business funding in which a company secures capital by selling rights to their future projected revenue streams at a discount. This is a win-win for both parties, as the startup receiving the capital can eliminate the time gap between customer-go-live and the eventual bump to their top-line revenue, and the financier generates a predictable return.
The two major types of revenue based financing are receivables financing and receivables factoring. The main difference being the sale of individual invoices (factoring) vs a cash advance on future projected revenue streams (financing).
For a more in depth look at revenue based financing, including the qualifications, top providers and frequently asked questions, check out the comprehensive guide we put together.