The Quiet Rise of Revenue-Based Financing for Indian SaaS and D2C Startups

For years, the Indian startup funding story was dominated by one question: How much equity did you raise?

But there is another question gaining traction among founders who already have customers: Why sell part of the company to finance inventory, advertising, or a sales campaign?

Revenue-based financing (RBF) offers an alternative. Businesses receive capital upfront and repay it from future revenue, generally until an agreed repayment amount has been reached. It does not magically make funding cheap or risk-free. It changes how growth is financed—and who bears which risks.

1. What Exactly Is Revenue-Based Financing?

In a conventional equity round, investors provide money in return for ownership. With a typical bank loan, a borrower makes scheduled repayments, often with interest and possibly collateral.

Under a classic RBF arrangement, a company receives an advance and pays a negotiated percentage of revenue until it has repaid a predetermined amount. Some products marketed alongside RBF use fixed instalments instead, so the actual contract matters more than the label.

Imagine a hypothetical Indian SaaS startup receiving ₹50 lakh, agreeing to repay ₹60 lakh in total, and committing 8% of monthly collected revenue toward repayment.

• At ₹40 lakh in monthly revenue, it pays ₹3.2 lakh.
• At ₹60 lakh, it pays ₹4.8 lakh.
• At ₹25 lakh, it pays ₹2 lakh.

These are illustrative terms, not a provider quote. Repayments vary with sales, but the obligation remains. Slower revenue can mean a longer repayment period, subject to any minimum payments, maturity dates, or other contractual conditions.

2. Why India Is Paying Attention

RBF is not brand new. Indian startups began experimenting with it around 2020, but its relevance has become clearer as founders look beyond venture capital for ordinary operating needs.

In January 2025, Financial Express reported stronger RBF activity among e-commerce and B2B SaaS startups during 2024. Velocity reported a 50% increase in disbursals, while GetVantage reported doubling its investments. These are company-reported figures, not evidence that every provider or borrower experienced similar growth.

The economic logic is straightforward: a business with proven demand might need money for a temporary growth opportunity without needing a new shareholder.

Consider a D2C skincare brand that sells consistently but must pay manufacturers before customers buy its next batch. Or a SaaS company that has recurring subscriptions but wants to accelerate enterprise sales. Both have financing needs that can be different from the high-risk, long-term product development traditionally financed by equity.

3. Why SaaS Businesses Are a Natural Fit

Subscription software businesses often have revenue histories that financiers can evaluate: monthly recurring revenue (MRR), annual recurring revenue (ARR), churn, retention, and customer acquisition costs.

A healthy SaaS company may know roughly how much it earns from existing customers next month. That predictability can make cash-flow-linked underwriting feasible.

RBF can support:

• Sales hiring with a measurable pipeline and payback period.
• Marketing campaigns with proven acquisition economics.
• Expansion into new regions after product-market fit.
• Short-term infrastructure costs tied to contracted customer growth.

But ARR is not cash in the bank. Annual contracts, delayed invoices, high churn, and expensive customer onboarding can all create repayment problems. A company should model cash collections—not just booked revenue—before taking financing.

In 2024, The Economic Times reported that Velocity and GetVantage had earmarked ₹300 crore and ₹250 crore respectively for SaaS-focused financing. That signalled an expansion beyond RBF's earlier emphasis on e-commerce and consumer brands.

4. Why D2C Brands May Need It Even More

D2C growth can be cash-hungry. Brands pay for manufacturing, packaging, warehousing, advertising, marketplace fees, and returns long before they know their final margin.

Suppose a profitable beauty brand discovers a product is selling rapidly. Scaling requires purchasing inventory today, while the sales proceeds arrive later. RBF can bridge that gap without forcing founders to raise a priced equity round for a relatively short-term requirement.

Quick commerce has made this challenge more visible. A January 2025 Mint report described consumer brands using alternative financing to support inventory and marketing as platforms such as Blinkit, Zepto, and Swiggy Instamart expanded. The report said Recur Club had disbursed ₹150 crore to consumer startups for quick-commerce ambitions over the preceding four months, according to its founder.

Still, revenue is not profit. A D2C company with thin contribution margins can struggle if the financier receives a percentage of gross sales before advertising, logistics, refunds, and inventory costs are covered.

5. The Indian Players Building the Market

Several names recur in discussions of cash-flow-based financing:

GetVantage

Founded in 2019, GetVantage began with revenue-based financing and expanded into broader cash-flow-based lending and embedded finance for MSMEs. In August 2026, Inc42 reported a ₹63 crore funding round to expand its financing platform. Its product range now extends beyond a single RBF structure.

Velocity

Velocity has provided growth financing to digitally enabled businesses and has actively targeted SaaS as well as e-commerce. Its announced SaaS allocation in 2024 was one sign of the industry's diversification.

Klub

Klub is another early participant in India's revenue-based financing ecosystem, particularly associated with consumer and digitally native businesses.

Recur Club

Recur Club operates in the wider alternative-debt marketplace, helping companies explore non-dilutive capital options. Not every product arranged through a marketplace is necessarily a pure revenue-share agreement.

Efficient Capital Labs

Efficient Capital Labs has focused on financing SaaS businesses, including companies operating across the India–US corridor. Financial Express reported more than $70 million in financing originated between Q1 2023 and Q2 2024.

Important: These are examples, not endorsements or a ranking. Eligibility, underwriting, lender identity, repayment structure, pricing, and regulatory arrangements can differ substantially.

6. RBF vs Venture Capital vs Traditional Debt

Factor	Revenue-based financing	Venture capital	Conventional business loan
Ownership dilution	Usually none	Yes	Usually none
Repayment	Often linked to revenue	No routine repayment	Typically scheduled
Main underwriting focus	Revenue and cash-flow quality	Growth potential and exit value	Creditworthiness and repayment capacity
Suitable use	Short-payback growth spending	Long-horizon, high-risk expansion	Predictable financing requirements
Major trade-off	Takes cash out of revenue	Gives up ownership	Fixed repayment pressure and possible security

RBF and venture debt are not synonyms. Venture debt can involve interest, covenants, and warrants; RBF is typically framed around revenue-linked repayment. Real products can blend features of both.

7. The Hidden Cost of a Simple-Looking Fee

Here is where founders need to be especially careful.

A lender might offer ₹50 lakh and ask for ₹60 lakh back. The ₹10 lakh difference looks like a 20% flat fee. But that is not necessarily equivalent to a 20% annual interest rate.

If the ₹60 lakh is repaid in equal monthly payments over 12 months, the implied financing cost is substantially higher on an annualised basis because the outstanding balance falls every month. Using a standard monthly internal-rate-of-return calculation, twelve ₹5 lakh payments on ₹50 lakh advanced imply roughly 2.9% per month, or approximately 41% effective annualised cost, before extra fees. Actual revenue-linked payments will produce a different result.

Always ask for:

• Total repayment cap and all processing or platform fees.
• Expected cash-flow schedule and effective annualised cost.
• Definition of revenue: invoiced, collected, gross, or net of refunds.
• Minimum payments, maturity date, defaults, and prepayment conditions.
• Whether the lender requires an escrow, security, personal guarantee, or access to payment accounts.

Non-dilutive does not mean inexpensive. The right comparison is against the economic return from the spending being financed, not simply against the emotional appeal of retaining 100% ownership.

8. The Data Advantage Behind RBF

The growth of digital commerce has also made financing easier to underwrite.

Instead of relying only on a founder's pitch deck, financiers can—subject to consent and applicable rules—review payment gateway records, bank statements, accounting data, GST information, marketplace sales, and subscription billing histories.

For SaaS, these records can reveal retention and collection quality. For D2C, they can expose seasonality, returns, customer acquisition spending, and repeat purchase behaviour.

This creates an opportunity for more precise underwriting. It also raises questions about privacy, cybersecurity, data access, and the consequences of granting a financing platform ongoing visibility into company finances.

9. When RBF Makes Sense—and When It Doesn't

RBF can be useful when a business already has reasonably predictable revenue, healthy contribution margins, and a specific use of funds that should generate cash quickly.

Potentially good fit: A SaaS startup with stable renewals wants to scale a sales channel with a demonstrated six-month payback. Or a D2C brand needs to replenish inventory for a product with reliable repeat demand.

Potentially poor fit: A pre-revenue AI startup is funding uncertain research. A consumer brand is losing money on every order. A SaaS company has heavy churn and long collection delays. Or a founder is using new financing simply to service older financing.

RBF should not be used to disguise a broken business model. If incremental sales do not create sufficient cash after variable costs and repayments, additional capital can accelerate losses rather than growth.

10. A Practical Checklist Before Signing

Before accepting a term sheet, founders should build three scenarios: expected revenue, a moderate slowdown, and a severe slowdown.

For each scenario, forecast monthly collections, gross margin, operating expenses, repayment amounts, and remaining cash balance. Test whether the company can survive a disappointing quarter without delaying salaries, taxes, suppliers, or critical product investment.

Then compare the offer against alternatives: a bank working-capital line, invoice discounting, venture debt, customer prepayments, a smaller equity raise, or simply growing more slowly from retained earnings.

Founders should also verify the actual regulated lending entity, contractual borrower obligations, and compliance requirements. Indian lending arrangements can involve banks, NBFCs, marketplaces, or other structures; the phrase "revenue-based financing" by itself does not establish the legal or regulatory treatment.

11. What Happens Next?

The interesting story is not that RBF will replace venture capital. It probably will not. Venture capital remains suited to businesses that need years of investment before generating dependable revenue.

The more plausible future is a more specialised funding stack: equity for uncertain innovation, conventional debt for stable assets and operations, and revenue-linked financing for growth initiatives with observable cash returns.

As more commerce and subscription data becomes available, underwriting may become faster and more granular. But growth will also invite tougher questions about borrower protection, transparent pricing, defaults, and whether fintech platforms are matching the right financing products to the right businesses.

Final Thoughts

Revenue-based financing reflects a maturing conversation in Indian startups. Instead of treating every capital requirement as a reason to raise another equity round, founders are beginning to distinguish between funding innovation and funding predictable growth.

That distinction matters. A founder who needs ₹50 lakh to fulfil orders faces a different problem from one who needs ₹50 lakh to discover whether customers want a product at all.

The smartest capital is not automatically the capital that preserves the most equity. It is the capital whose cost, repayment schedule, and risk match the business opportunity.

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TL;DR

• Revenue-based financing provides upfront capital repaid through a share of future revenue, often until an agreed cap is reached.
• Indian SaaS and D2C companies are exploring it for sales expansion, inventory, marketing, and working capital.
• Providers and platforms in the wider market include GetVantage, Velocity, Klub, Recur Club, and Efficient Capital Labs.
• The appeal is usually limited dilution and repayments that may flex with sales.
• The catch is that flat fees can conceal a high annualised financing cost, while revenue-share payments can strain margins.
• RBF works best for businesses with predictable collections and short, measurable payback periods—not speculative product development or structurally unprofitable growth.

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Sources and Further Reading

1. Financial Express — Fast & flexible: Startups turn to revenue-based financing (January 2025)
2. The Economic Times — Revenue-linked financiers bet big on SaaS companies (January 2024)
3. Mint — Why quick commerce is driving brands to alternative financiers (January 2025)
4. Inc42 — GetVantage raises ₹63 crore to expand financing platform (August 2026)
5. YourStory — Navigating private credit: Funds, terms, and execution (January 2026)

This article is for informational purposes and does not constitute financial or legal advice. Financing terms and provider offerings may change.