Venture Debt vs. Revenue-Based Financing: Which is Right for Your Startup?
Venture Debt vs. Revenue-Based Financing: Which is Right for Your Startup?
By Zoe, Founder and CEO of Insight Funders
Introduction
When it comes to financing, startups now have more options than ever beyond just equity. Venture debt and revenue-based financing (RBF) are two popular, non-dilutive alternatives. In this post, we’ll break down each type, explain when each might be the right choice, and show how they can help your business grow without sacrificing ownership.
What is Venture Debt?
Venture debt is typically offered to startups that have already raised some equity funding. It provides a loan based on a company's equity valuation, allowing founders to extend their runway without further dilution. Venture debt is often ideal for companies looking to bridge the gap between funding rounds.
What is Revenue-Based Financing?
Revenue-based financing (RBF) allows companies to repay loans based on a percentage of monthly revenue. This type of financing is ideal for businesses with consistent revenue streams but unpredictable cash flow, as payments scale with earnings.
Choosing the Right Option
Venture Debt: Best for startups with VC backing looking for additional runway.
RBF: Suited for companies with steady revenue, allowing flexible repayment that scales with growth.
Insight Funders’ Solution
Our platform connects you with both venture debt and RBF providers, so you can find the financing option that best aligns with your goals and financial situation.
Conclusion
Both venture debt and revenue-based financing are powerful options that allow founders to grow without dilution. At Insight Funders, we provide access to a range of financing solutions to help you scale confidently.
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