Revenue-Based Financing: The Fundraising Option Indian Founders Keep Ignoring
If you have recurring revenue and don't want to dilute equity, RBF is a genuine alternative. Here's when it makes sense and when it doesn't.
The fundraising conversation in India is almost entirely about equity. Seed round. Series A. Angel cheques. VC funds. It's the only model most founders consider.
Revenue-based financing (RBF) is a category that has been growing quietly, and it's worth understanding — especially if you're a founder with predictable recurring revenue who doesn't want to give up another 15–20% of your company.
What RBF actually is
In a revenue-based financing deal, a provider gives you a capital advance (typically 1–3x your monthly recurring revenue) in exchange for a percentage of your future monthly revenue until you've repaid a multiple of the advance — usually 1.3x to 1.6x.
Example: you have ₹30L in MRR. An RBF provider gives you ₹75L. You repay 8% of monthly revenue until you've paid back ₹1.1Cr. No equity transferred. No board seat given. No valuation negotiated.
When RBF makes sense
RBF works best when:
- You have predictable, recurring revenue (SaaS, subscription commerce, D2C with strong retention)
- You need growth capital for a specific use (paid acquisition, inventory, a single hire) — not runway extension
- You're between equity rounds and don't want to raise a bridge note that dilutes you
- Your unit economics are solid — RBF repayment should come from the incremental revenue the capital generates
It does not work when you're pre-revenue, when your revenue is lumpy/project-based, or when you need more capital than your revenue can support repayment on.
Who operates in India
The RBF market in India is still early but growing. Providers like Velocity, GetVantage, Recur Club, and Klub have been active. Their appetite varies by sector — D2C, SaaS, and subscription models tend to qualify most easily.
The honest trade-off
The cost of RBF capital is higher than equity on a pure IRR basis, especially in the early stages of a company when valuation multiples are high. But the comparison isn't RBF vs. equity. The comparison is RBF vs. equity you don't need to give up.
If you can grow your company from ₹30L MRR to ₹80L MRR using ₹75L of RBF capital, and your equity is worth 3x more when you do raise your next round, the "expensive" capital was actually the cheapest possible option.
Priya Ahuja
Corporate Development at Groww. Writing about fundraising, VC careers, and startup strategy from the inside.
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