# Revenue-based financing

> Cash repaid as a percentage of revenue up to a multiple: non-dilutive, priced by the multiple.

Source: https://lopifi.com/learn/ways-to-raise-startup-capital/revenue-based-financing
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**What is revenue-based financing?** Cash repaid as a percentage of revenue up to a multiple: non-dilutive, priced by the multiple.

In [revenue-based financing](https://lopifi.com/md/glossary/revenue-based-financing) a provider advances cash and is repaid a fixed percentage of the company's ongoing revenue until it has received a set multiple of the advance, often called the cap. Nothing is sold, so nothing dilutes; the cost is the multiple, and how fast it is paid depends on how fast revenue arrives.

— [Wikipedia, “Revenue-based financing”](https://en.wikipedia.org/wiki/Revenue-based_financing), Revenue-based financing — background

**Revenue-based financing**
- Pro: No dilution and no valuation
- Pro: Payments fall when revenue falls
- Pro: Fast to arrange
- Con: The multiple is expensive if revenue grows fast and repays it quickly
- Con: Payments come out of revenue every period, from the start
- Con: Needs revenue: no help before there is any
- Best for: Companies with steady, predictable revenue — subscription revenue especially

## Where this page's rules come from

- [Wikipedia, “Revenue-based financing”](https://en.wikipedia.org/wiki/Revenue-based_financing) — Revenue-based financing — background (reference)

- **Track:** [Cap tables & raising](https://lopifi.com/md/learn/equity)
- **Part of:** [Ways to raise: SAFEs, notes, priced rounds, debt and grants](https://lopifi.com/md/learn/ways-to-raise-startup-capital) — 3 min
- **Terms taught:** [Revenue-based financing](https://lopifi.com/md/glossary/revenue-based-financing)
- **Previous:** [Venture debt](https://lopifi.com/md/learn/ways-to-raise-startup-capital/venture-debt)
- **Next:** [SBIR and non-dilutive grants](https://lopifi.com/md/learn/ways-to-raise-startup-capital/sbir-and-non-dilutive-grants)
- **The course:** https://lopifi.com/md/learn