9 Best Non-Dilutive Funding Platforms for Startups

We, in general, often consider venture capital an ideal method to raise funds for a startup. It’s, after all, a far better option than bank loans and offers you access to capital without putting your assets as collateral.

While theoretically, it is a better option, in practice, only 0.05% manage to secure it.

Venture Capital is not only hard to acquire, but it usually comes at the cost of your equity, making it an unviable choice for those who need cash mainly to cover operational expenditures.

Non-dilutive financing is a suitable alternative to venture capital and traditional bank loans. With this channel, you can receive all the monetary benefits without relinquishing your major assets.

What is Non-Dilutive Funding, and Why Should Startups Consider it?

Non-Dilutive Funding is a type of financing method in which you don’t have to sell a portion of your company’s ownership to be eligible for the funding. It works similarly to a traditional loan, but with much more flexible and customer-friendly terms.

You can raise non-dilutive funding through several methods, such as government grants, tax credits, unsecured loans, and even family contributions. But here are some common products you can look up to get quick money for your business;

• Revenue-based financing: You receive upfront capital against your future recurring revenues. (Also referred to as ARR financing)
• Term Loans: You receive a short-term loan based on your business performance history.
• Credit Line: A revolving loan for regular expenditures.
• Merchant Cash Advance: A lump sum cash against future sales proceedings.

There are plenty of benefits attached to the above non-dilutive funding channels.

You aren’t required to provide collateral. You can set your own terms. And most of all, you’ll have complete control over your company. The lending or investing firm only takes your business health into consideration and offers appropriate capital that you can easily return.

Below, I have put together a list of platforms that deliver non-dilutive funding to startups. Browse through my reviews and see if your company matches the criteria.

1. CapChase

CapChase is a New York-based FinTech company that offers ARR financing to SaaS businesses.

Its product is flexible and scalable, allowing you to draw cash only when you need it and pay back in monthly installments from your subscription revenues.

Its underwriting process typically takes 48 to 72 hours, and once approved, the initial funding is deposited into your bank within three business days.

The minimum amount you can draw from the CapChase is $25000. As for the maximum, it depends on your revenues. Since the entire model is based on your future recurring income, the higher your customer’s contract value is, the more you can receive. In general, you can request up to $1,100,000. But I suggest trying its website calculator. It will give you a general figure you can get from CapChase.

You’ll also receive your business health insights on your dashboard. It highlights your cash balance, monthly recurring revenue chart, and retention rate to help you predict your financing needs.

Summary

Headquarters: New York, USA

Product: Revenue-based financing

Businesses it Supports: SaaS companies

Funding: Up to $1,100,000

Best for: Cash runway

2. Clear Co (Formally ClearBanc)

Clear Co provides lending options to US-based eCommerce businesses. The platform delivers upfront cash to meet various operational needs, such as stock purchases, vendor payments, marketing, and logistics.

You can receive up to $20 million from Clear Co and repay the debt as you earn money along the way. Almost, 7000 customers are currently using its services to grow their startups.

The eligibility criteria of Clear Co are slightly strict but user-friendly. There are around 19 products it doesn’t support. Otherwise, anyone who generates a minimum of $10k per month can apply for the funding. Here’s a list of niches not applicable for the loan.

After the signup process, it takes 2 to 4 business days to receive the funding. You’ll be charged 5.25% to 10.25% fees with no compounding interest structure.

It shares a straightforward payment schedule and sends invoices for each debit transaction. During slow months, the platform automatically reduces the debt and extends the schedule accordingly to adjust the amount.

Short Summary

Company’s Headquarters: Toronto, Canada

Product: Revenue-based financing

Businesses it Supports: eCommerce, service-based, and SaaS companies

Funding: $10 to $20M

Best for: Operational expenditure

3. Pipe

Pipe also delivers revenue-based financing services, but its business model is entirely different from other FinTech companies like CapChase and Clear Co.

It acts as a trading platform, providing you with a secure, fast, and non-dilutive alternative to venture capital. Here, instead of directly specifying the initial funding, it lets you sell your customer recurring contracts to available investors. The moment you finalize the deal, Pipe automatically deposits the agreed-upon funds into your account.

Your trades will have no bearing on your customer relationships, and your subscription contracts will be treated as assets.

This type of debt financing comes with several benefits. For one, you’ll have the choice to select the best terms for your company. Secondly, you can access the advance instantly. The approval process might take a couple of days, but once you’re in, you won’t have to wait long.

To be eligible, you must have a minimum of $100K ARR, though. Your company should also be US and UK based, or at least have a subsidiary in those countries.

Short Summary

Company’s Headquarters: Miami, USA

Product: Revenue-based financing

Businesses it Supports: SaaS companies and service providers

Funding: To be determined by your ARR

Best for: Cash runway, growth capital

4. Uncapped

Uncapped has extremely flexible funding options, making it easier for small businesses and startups to acquire capital on short notice.

You can take up to 50% of your annual recurring revenues in advance with monthly installments, or ask for fixed capital and set your own payment schedule. The company charges a minimum 2% flat fee and lets you set weekly or monthly repayment plans.

This type of product is ideal for SaaS, eCommerce, and D2C companies. If you’re a solopreneur, however, there’s a possibility you might not be eligible for the loan. 

Another thing you should consider while applying for funding is your business performance. If you’re generating $10k monthly and 40% of your revenues comprise online sales, go ahead and signup for the platform today!

You can take up to $10 million and repay the debt within 24 months. And as your business grows, you can later extend the terms. 

Short Summary

Company’s Headquarters: London, UK

Product: Revenue-based financing

Businesses it Supports: SaaS and eCommerce

Funding: $100k to $10M.

Best for: Cash runway, Inventory purchase, other short-term investments

5. Founderpath

Founderpath was established in 2019 to help founders bootstrap their SaaS businesses. Since then, it has grown into a successful venture, raising $60 million to support over 130 companies.

The platform attracts startups earning $1M to $5M in annual revenues and offers them 30% to 50% of their ARR in upfront capital.

Aside from financing, it checks out your business operations and delivers the figures you need to get more customers. It also runs an invite-only community of founders to offer them a place to build connections. 

The signup process on Founderpath can take 24 hours to nine days, but after approval, the money is deposited in 24 hours. 

Its debt limit is flexible, and the repayment schedule is comparatively longer than its competitors. The minimum advance you can take against your future receivables is $500k, and it grows with your monthly revenue size.

The most appealing feature of Founderpath is its accessibility. Founders from the US, Canada, Europe, and even Asia can apply for financing. 

Short Summary

Company’s Headquarters: Texas, USA

Product: Revenue-based financing

Businesses it Supports: SaaS companies

Funding: $500k to $50M

Best for: Cash runway, growth capital

6. FlowCapital

FlowCapital is one of the oldest FinTech companies operating in Canada. It serves in US, UK, and Canada and provides non-dilutive growth capital to SaaS and other tech businesses.

Its core products are Venture debt and Revenue-based financing. Venture debt is ideal for those willing to issue stock warrants (Offering investors the right to purchase the stock from the company in the future.) It doesn’t eliminate the dilution but minimizes it greatly.

You can receive up to $7M in VD and pay it back within five years. You can also choose a Non-Amortizing Term Loan and make a balloon payment.

The Revenue-based product offers almost similar benefits, but its payment terms are more flexible. It’s well-suited for SaaS businesses with long-term subscription contracts.

What makes FlowCapital different from other financial service providers is the payment schedule and eligibility criteria. Unlike other lenders, it delivers debt financing to mature startups with annual revenue of at least $4M. Meaning, it’s only a viable option if you need funds to scale your business.

Short Summary

Company’s Headquarters: Toronto, Canada

Product: Venture debt, Revenue-based financing

Businesses it Supports: Mature startups

Funding: Up to $7M

Best for: Expansion, cash runway

7. Ondeck

Ondeck is a lending platform that provides credit lines and term loans to US-based companies. While its target market is mainly small businesses, it can be a great non-dilutive funding channel for your operational expenses.

Once qualified for the loan, you can receive funds on the same day with the option to repay it within 12 to 24 months. The maximum limit for a term loan is $250k, and for a credit line is $100k.

If you choose a credit line for your business, you can draw a minimum of $6k and pay only the amount you borrowed. On each repayment, your credit limit replenishes, giving you access to more funds.

The only drawback of this type of debt financing is its fees. You may have to pay comparatively higher interest rates. It also might not approve loans to some companies that fall under its restricted products list. 

The good news is you don’t have to provide collateral. A Personal guarantee is enough to be eligible for the loan. 

Short Summary

Company’s Headquarters: New York, USA

Product: Revolving credit line and term loan

Businesses it Supports: Startups and small companies

Funding: $6k to $250M

Best for: Working capital

8. Credibly

Credibly is another great option for short-term funding.

 Here, you can take short-term and microloans and repay them with your sales proceedings. For large amounts, you can request long-term financing and get your application approved within 24 hours.

There’s also an option to receive upfront cash against unpaid invoices. The platform delivers around eight different products, including merchant cash advances and business credit lines.

While its eligibility criteria and payment terms differ with each product, in general, anyone who has been running their business for at least 6 months is qualified for the loan. You can receive up to $400,000 with a term length of 12 to 24 months.

I do want to point out that some of its products may ask for collateral. If you opt for the merchant cash advance or invoice factoring (loan against receivables), you probably won’t encounter any such issue. But if you decide to go for a working capital loan, you might be asked for collateral. I recommend checking out its website for more details.

Short Summary

Company’s Headquarters: Detroit, USA

Product: Merchant cash advance, Business credit lines, term loans

Businesses it Supports: Startups and small companies

Funding: Up to $400,000

Best for: Operational expenditure, equipment purchase

9. Lighter Capital

Lighter Capital supports tech startups in the US, Canada, and Australia. It was founded in 2010, and since then, it has deployed $400k to founders and growing businesses.

If you earn 15k in monthly revenues, you can opt for three of its non-dilutive financing products; Revenue-based, term loans, and contract-based loans. (The contract product delivers upfront cash against 12-month short contracts or a large receivable.)

For repayment, Lighter Capital allows up to three years of relaxation. You can fix monthly installments or tie the repayment schedule to your future sales. It’s up to you.

The website shows transparent pricing with a valuation calculator to let you generate the estimated cost of capital. But generally, you can receive a $1M to $4M loan based on your business health report. In addition to funding, Lighter Capital also gives you access to its community network and offers other perks like software discounts.

Overall, it’s worth exploring.

Short Summary

Company’s Headquarters: Seattle, USA

Product: Revenue-based financing

Businesses it Supports: SaaS companies

Funding: Up to $4M

Best for: Cash runway, Growth Capital

Conclusion

Startups typically require substantial capital to remain sustainable in the coming years. But at an early stage, CEOs usually struggle to meet financial needs from in-house sales and eventually look for an outside source to support their operations.

Non-dilutive funding comes as a game-changer for such founders.

It has made short-term financing easily accessible, allowing entrepreneurs like you the freedom to establish your business without stressing over monthly expenditures.