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How Lighter Capital Streamlines Startup Financing Applications

Startup Financing Application

Revenue-based financing is an excellent option for startups that need money to grow, but that don’t want to trade their valuable equity for investments.

In today’s market, especially with SaaS startups, the amount of time needed to bring a product to market has shrunk, and because of this, startups are less likely to seek venture capital funding. Rather than diluting ownership and giving up some control in their companies, founders can use alternative startup financing — revenue-based financing, term loans, and lines of credit — to accelerate their growth in the market more quickly.

As observed by Tomasz Tunguz, angel investors are funding fewer companies. “You’re 20X more likely to raise your seed round from an institutional seed than an angel syndicate,” noted Tunguz. Contrarily, we revealed in our recent industry report that revenue-based financing is proving increasingly popular, providing growth capital to hundreds of revenue-generating growth stage startups each year.

Annual Revenue Growth of Lighter Capital Funded Companies Pre-Funding

How we use data to streamline startup financing applications

At Lighter Capital, we have built a streamlined startup financing application process to welcome new applicants, collect data from them, and determine whether we will offer them funding. As Head of Systems, it has been my role for over eight years to develop and oversee this process, as well as integrate our tools with Salesforce (our CRM), Marketo (our digital marketing tool), and other tools we use to manage the process.

Revenue-based financing is structured like a loan, but investors’ returns are directly linked to a startup’s performance, which is more like an equity investment. A key difference is that our startup financing model does not require founders to give up equity or control of the business. For example, we don’t require stock warrants from any of our borrowers. Because of this, we at Lighter Capital are incentivized to help companies grow, because this leads to a faster repayment rate and a higher initial rate of return.

Companies using revenue-based financing pay a percentage of the cash they receive from customers, so they don’t have to worry about their repayments affecting strategic operations. These repayments can vary as a business’s revenue ebbs and flows, providing a great deal of flexibility; there’s no need to write a big check in a slow month, or when a company is waiting to conclude a big contract.

Startups can apply for financing using our online application form, where you answer a few questions (which reduces the time between application and our funding decision), upload your financials, and then one of our business development representatives will call you within 1 to 2 business days, provide a term sheet in one week, and funding in 3 to 4 weeks.

Our goal is to get out of your way, to allow you to get as far as you can in our application process without having to talk to a person. It’s not that we don’t want to get to know businesses, but we want them to be comfortable with the process and take things at their own speed.

Our financing application is fully integrated with Xero, and QuickBooks Online and Desktop versions

Startup financing application fully integrated with Xero, and QuickBooks Online and Desktop versions

We don’t consider your industry specifically, but we want to know what your revenue numbers are, where you are in your fundraising path, and whether you can sustain our debt. We’ve partnered with accounting software, such as QuickBooks and Xero, so we can have read-only access to your bank accounts.

When you reach the underwriting stage, after a deal is agreed by both sides, you can come in, sign into your bank account, and those services give us access to your balance sheet, profit and loss, and our underwriters examine at all this data. Once we have the necessary information, the time between initial application to when money is delivered to a company is about 3 to 4 weeks, ensuring that companies don’t spend too much time or resources in obtaining funding.

Why choose Lighter Capital to finance your startup’s growth?

Lighter Capital financing repayment success rate

Lighter Capital has provided more than $200 million in financing to more than 350 startups in over 650 financing rounds. Our experience and our modeling allows us to have a 95% success rate in companies repaying their financing. Our underwriters have gotten to know SaaS business models very well, and they apply their knowledge of how your business is set up, and how your contracts are structured to determine how your business should grow. In analyzing this data from a startup, we run a model based on our experience funding other businesses to see how we think an applicant’s business will do over three to five years.

A long-term partnership

We’re in this for the long haul. We’re not interested in the next Uber, or in your projected unicorn; we’re betting on solid businesses that show potential for growth. Many of the startups we have funded have come back to us, after paying off their first round of financing, to get additional financing to boost their growth at a later stage. We want to develop this type of relationship where we work with companies as they grow.

We understand tech startups

Of course, we don’t fund just any company. Companies don’t necessarily need to be profitable, but they need to generate revenue, and show a good diversity of customers and good growth potential.

We also don’t shut doors on companies that we decline to fund. If a company comes to us for funding and we feel that their burn rate is a bit too high, or that their revenue isn’t quite enough to sustain a loan, we are always willing to speak to them later when things change. If, in three months or six months, a business is doing a lot better, all they have to do is refresh their financials and reestablish their relationship with us without even having to send an email. In many cases, we can provide an answer without needing a salesperson to get involved.

Even before you apply to us, you can get an idea of how your company could handle our alternative startup financing. We have a Cost of Capital calculator, which can help you identify how much value and ownership you would retain raising revenue-based financing compared to equity.

Retain ownership and control

At Lighter Capital, we want to help startups grow their business and retain control of them. We want to work with companies as they grow and help them attain their next milestone objectives. Revenue-based financing, term loans, and lines of credit are the most entrepreneur-friendly ways for companies to grow at their own speed – and we are there to help them achieve their goals.

To learn more about our startup financing solutions and how they differ, click the button below for a detailed side by side comparison and the unique features of each loan to determine which option is best for your company.View Product Comparison


Further reading:

  1. The Role of Data in Venture Capital and Revenue-Based Financing

  2. Business Lines of Credit: What SaaS Startups Need to Know

  3. What Is a Term Loan and How to Get a Loan for Your Small Business

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