Frequently Asked Questions
Get answers to the most commonly asked questions.
WHAT IS NON-DILUTIVE FUNDING?
Non-dilutive funding is a type of debt financing that's often advantageous for early-stage tech startups that are:
Generating recurring revenue.
Need capital to scale the business quickly.
With non-dilutive funding, entrepreneurs can easily raise capital to invest in growth without giving up ownership and without devaluing their equity stake.
WHAT ARE THE BENEFITS OF DEBT FINANCING FOR STARTUPS?
Debt financing has many benefits for startups, including:
You can invest your time and energy in growing the business instead of pitching equity investors for funding you may never secure.
You can grow sustainably, at a reasonable cost, managing smaller amounts of capital to move the business forward.
You maintain ownership and control without selling equity, which is often more costly in the long-run.
Debt financing can give you a strategic advantage in your funding journey, as well.
For example, bootstrapped startups frequently use debt to increase their ownership value at exit. By leveraging debt to gain enough traction and momentum to raise a big equity round, they avoid speculative early-stage valuations and costly equity grabs from VCs and angels.
At later stages, startups can use debt financing as a bridge in between VC rounds, either funding runway to protect against a down round or to boost results before their next valuation.
Try our Equity Dilution Calculator to see how you can benefit from raising capital with non-dilutive debt financing instead of selling equity.
HOW CAN MY STARTUP USE GROWTH CAPITAL?
Growth capital provides startups with a bigger long-term investment, which enables them to scale the business more effectively than they could with smaller short-term working capital loans or their revenue streams.
Here's how we frequently see founders put their growth capital loans to work:
Fund working capital
Invest in sales and marketing
Invest in product development
Hire talent and build out new teams
Expand into new markets
Invest in infrastructure
Bridge equity funding rounds
Restructure old debt
Buy out tired investors
WHAT TYPES OF STARTUP FINANCING DO YOU OFFER?
We offer different types of non-dilutive debt financing solutions to support the varying needs of growing early-stage startups.
Get upfront capital in a term-based loan with a traditional structure and fixed monthly payments, or get financing with one of our revenue loan facilities. We partner with you to learn your business and find the best type of financing that will help you reach your goals.
WHAT IS REVENUE-BASED FINANCING?
Revenue-based financing is a type of debt funding that provides startups with a quick upfront injection of growth capital based on the business’ recurring revenue stream.
HOW DOES REVENUE-BASED FINANCING WORK?
Payment terms on RBF loans are structured as a fixed percentage of your monthly revenue — when your revenue increases over the term of your loan, your payments also increase, and vice versa.
Growing revenue and growing payments means you’ll pay back your loan faster. If your revenue is down, you'll be slower to pay off your loan; you won't be strapped into monthly payments you can’t make, though!
Our RBF loan terms are typically 3 years, but you might pay it off sooner if your business grows quickly.
HOW LONG DOES IT TAKE TO GET FUNDED?
Our process with new clients typically takes 3-4 weeks, but it can move quicker. Funds are generally available within days of loan approval.
You don't need to prepare a pitch deck or presentation. There's no valuation negotiation. We do, however, want to ensure that:
We're a great fit for each other.
We allow time for due diligence.
You get the best deal to support your short and long-term goals.
Apply online in less than 5 minutes to see what you qualify for.
HOW MUCH FUNDING CAN MY STARTUP GET?
Well-qualified companies can get up to $4 million. Many of our clients raise multiple rounds through Lighter Capital!
Apply online in under 5 minutes to see how much you could be approved for.
CAN I STILL RAISE EQUITY ROUNDS, AND HOW WILL THIS AFFECT MY STARTUP'S VALUATION?
Yes! 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:
It makes the pie bigger for them.
Having fewer early-stage investors means there’s more pie to go around.
There’s also no valuation event, which helps keep everything simple. Our clients have used our funding to scale their companies and earn better term sheets from prospective investors, and many of our clients go on to raise VC funding.
WHAT WILL I PAY IN INTEREST?
Unlike a traditional loan, revenue-based financing doesn't have a set payment amount each month. Instead, you pay a percentage of topline revenue (usually between 2% and 8%, but never more than 10%) until the total repayment cap is reached. The repayment cap varies between 1.3-1.5X the funded amount depending on the health and stage of your business.
CAN I PAY BACK AN RBF LOAN EARLY?
You can pay back your loan (plus return cap) at any time; however, there is generally no incentive for paying back an RBF loan early.
We honor an exception for a special event within the first year, such as raising a VC round. And if you happen to get acquired, you simply buy us out of the remaining debt on your loan. Then we all celebrate your hard work paying off!
IS REVENUE-BASED FINANCING JUST A FANCY WAY TO SAY “FACTORING” OR “RECEIVABLES 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.