Revenue Based Financing for Companies

Revenue Based Financing

Revenue Based Financing is a capital raising method in which investing parties get a fraction of the company’s ongoing total gross revenues in exchange for capital.

As technology companies strive for growth and scalability, they need access to capital. However, conventional forms of financing like debt financing or equity-based finance may only sometimes be a good option. Revenue-based financing (RBF) has emerged as a route toward success for start-ups and already-established technology companies.

With the expected global revenue-based financing market size to reach over $ 42 Billion by 2027 and with an estimated CAGR of 61.8% (2020-2027), the popularity of RBF is increasing manifolds. It offers a quick, flexible, non-dilutive, and low-risk way to access growth capital.

If you own a Technology Company based in the USA, Canada, Australia, the UK, or Singapore and wonder if Revenue Based Financing is an ideal solution to access capital to accomplish your business goals, this blog is for you. Dive in to unfold the intricacies behind Revenue Based Financing for technology companies based in the USA, Canada, Australia, the UK, and Singapore.

What is Revenue-Based Financing?

Revenue-based financing (RBF), also known as Royalty Based Financing, is a capital raising option that provides growth capital to businesses by pledging a certain percentage of the company’s ongoing total gross revenues. Unlike traditional ways of financing that require collateral, personal guarantees, or fixed monthly payments, RBF is based on the firm’s projected revenue.

A Quick Snapshot of RBF in Canada and The USA

RBF has been growing steadily in both the USA and Canada. While the RBF market size in Canada has been increasing at an average rate of 25% since 2015, in the USA, it has grown at a CAGR of 15% from 2015 to 2020.

The top industry verticals for RBF in the USA include software as a service (SaaS), e- commerce, and fintech. RBF is popular among early-stage technology companies in the software, e-commerce, and health tech sectors in Canada.

The growing popularity of RBF in both these countries has led to the emergence of RBF providers. With a funding deployment capacity of up to $25,000,000, Avon River Ventures is one of the key players in the revenue-based financing market in the USA, Canada, the UK, and Singapore.

How Does Revenue-Based Financing Work?

RBF investors generally work with lower to middle-market companies that have generated good revenue in recent years.

To know how revenue-based financing works, suppose you are an owner of a technology company whose growth is clinched on an expansion requiring a capital of about $2 Million. But you can’t obtain a loan from banks, and at the same time, an equity dilution is costly. Revenue Based Financing is the option left with you to meet the capital needs.

The next step is to connect with a firm specializing in Revenue Based Financing, such as Avon River Ventures. This firm will give you the required capital for a percentage of your revenue.

How much flnancing will your company be qualifled for?

If your business makes $600,000 in Annual Revenue (roughly $50,000 in monthly revenue), you will be qualified for 3-9x MRR (Monthly Recurring Revenue). In this case, you can expect funding anywhere between $150,000 and $450,000.

Suppose you qualify for $400,000 (disbursed amount), and the yearly interest rate is 8%. We will take 8% interest + a set principal payback until you pay back $450,000 (payback amount). You can repay the loan in 12/24/36 months based on your monthly Revenues.

Advantages of Revenue-Based Financing for Technology Companies:

There is a plethora of benefits of revenue-based financing for technology companies which include:

It offers a non-dilutive form of financing, meaning companies can raise capital without sacrificing equity.

RBF has a lower capital cost as compared to other traditional financing options

There are no fixed payments; instead, payments can vary from month to month, which is again beneficial for technology companies with non-uniform revenue patterns.

RBF also allows companies to possess more profits, as they are not required to pay back a fixed debt with interest.

Along with the benefits mentioned above, Revenue Based Financing from Avon River Ventures can be even more advantageous. The various benefits include:

Flexible Terms: Amendments to term sheets are based on your ad hoc financing requirements

Multiple Offers: Multiple scenario-based financing offers for you to pick and choose the best that works for your business

No Hidden Terms: Term sheets do not come with industry-heavy financial jargon making it easier for the founders to understand. There are no hidden or implied terms of covenants in our term sheets.

Growth Focused: RBF instruments are designed to help businesses grow, expand, and scale.

Fast Approval: The term sheet is obtained within 3-6 weeks, depending on the complexity of the transaction

Ongoing Support: Continuous support and vital industry connections to help you outside financing capabilities.

Disadvantages of Revenue-Based Financing

Besides the advantages, there are also some disadvantages that technology companies need to consider before choosing this type of financing. Some of the main drawbacks include:

Revenue Sharing: Since the RBF provider gets a percentage of the company’s revenue, the company will have to share the payment, even when it is not profitable. This can be a disadvantage for companies that have low-profit margins.

Limited Capital: Compared to traditional lenders, RBF providers may get ready to give only a fixed amount as capital. This can disadvantage technology companies that require more significant amounts of money to scale their operations. Hence, RBF could be a bridge or additional working capital for Technology businesses that are in the middle of raising a big financing round.

Criteria For Revenue-Based Financing For Technology Companies in USA and Canada

As an RBF provider, Avon River Ventures has a set criterion for revenue-based financing. This includes:

Minimum two years in the business

Headquartered in the USA, UK, Canada, Singapore or Australia SaaS, Consumer Brand, Technology, manufacturing, E-commerce, or Software. We will consider any business outside our accepted industries on a case-by-case basis.

A minimum of $250,000 in Annual Recurring Revenue or $500,000 in Annual Revenue Funding Requirement between $60,000 to $25,000,000. Funding over $7,000,000 is available in the trench.

Also Read: Our SIX-STEP Process to Fund your business in 30 Days!


Technology companies in the USA and Canada increasingly turn to revenue-based financing (RBF) as a viable alternative option. It’s important to carefully evaluate RBF’s criteria, benefits, and drawbacks to make an informed decision. Choosing a dependable RBF provider like Avon River Ventures can also be crucial for your business’s success. Contact us today to learn more about our Revenue Based Financing services.

Disclaimer: The information provided in this content is just for educational purposes. Consult us to learn more about Revenue Based Financing. All Rights Reserved by Avon River Ventures.

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