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Overview: Revenue-Based Financing (RBF)

Revenue-Based Financing (RBF) is an alternative funding model where investors provide capital to a business in exchange for a percentage of future revenues until a predetermined amount is repaid.

It sits between equity financing (giving up shares) and debt financing (fixed repayments), offering a flexible, performance-linked repayment method.

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Eligibility Assessment
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Revenue Analysis
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Table of Contents

How It WorksBenefits of Revenue-Based FinancingComparison: RBF vs Equity vs Debt FinancingHow FirstStartup Can Help

How It Works

  • A company receives a lump-sum investment (e.g., ₹50 lakhs or $100,000).
  • In return, it agrees to share a fixed percentage of monthly revenue (usually 5–15%) until it repays the initial investment plus a multiple (e.g., 1.3x to 2x).
  • The repayment amount varies with monthly revenue — higher revenues mean faster repayment, and vice versa.

Example: If a company takes ₹50 lakhs with a 1.5x repayment cap, it will repay ₹75 lakhs over time through revenue-sharing.

Benefits of Revenue-Based Financing

  • No dilution of ownership
  • Flexible repayments based on performance
  • Quick funding access
  • Founder-friendly: no board seats or control loss
  • Ideal for recurring revenue businesses

Comparison: RBF vs Equity vs Debt Financing

Ownership Dilution

  • RBF: No
  • Equity: Yes – Shares given to investors
  • Debt: No

Repayment

  • RBF: % of revenue monthly
  • Equity: No fixed repayment
  • Debt: Fixed EMIs or bullet payments

Collateral

  • RBF: Typically not required
  • Equity: No
  • Debt: Often required

Speed of Funding

  • RBF: Fast (1–2 weeks)
  • Equity: Moderate to slow
  • Debt: Slow to moderate

How FirstStartup Can Help

  • Assess your eligibility and prepare a revenue forecast
  • Prepare documentation (GST, bank statements, P&L)
  • Connect you with verified RBF providers
  • Assist with compliance, reporting, and investor coordination
  • Compare RBF vs Equity vs Debt for strategic decision-making

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