One of the biggest challenges for any startup is growing its business efficiently. Recent turbulence in the economy has seen investors growing nervous about how much cash early-stage companies need in terms of “runway,” or put another way, how many months of burn companies need to reach the next milestones. This minimum cash runway has increased from 10–12 months to 18–36 months. Raising capital has become more difficult and is taking longer.
The difficulty is due to recent decreases in public valuations and the trickle-down impact on smaller privately held SaaS and recurring revenue businesses. Due to lower valuations, companies get backed into achieving greater milestones to reach their valuation expectations. Higher growth performance is needed to attain the equivalent valuations as before.
The above factors lead to increased cash needs to extend runways and higher growth. The need for more cash with more expensive equity options forces founders to seek alternative sources of capital to extend their runway and preserve dilution.
Industry data show that top-performing SaaS / Recurring Revenue companies spend 40-50% of their ARR on sales and marketing. So, how does a Founder achieve higher growth without diluting? By leveraging their subscription based recurring revenue with a creative, financing partner. At a basic level, growth debt alleviates a large part of a business’ working capital needs. And RevTek’s lines of credit create the ultimate flexibility by only paying when you draw our debt financing.
We take a lot of time upfront to understand a company’s business. We are long-term partners, not transactional, and work to create a capital structure that allows a company to grow and access capital as needed.
At RevTek, our creative financing lets founders inject an exact amount of capital to cover their customer acquisition costs and align the repayment term with future revenue.
We help accelerate growth by offering flexible lines of credit with interest-only periods so you can maximize top-line revenue and enterprise valuation.
We have helped companies with the following:
• Extend runway and reach milestones necessary for a successful exit
• Grow Revenue while raising equity at lower valuations and less dilution to owners/founders
• Accelerate growth and further develop technology to increase valuations for future exit or equity raise
At a basic level, our financing alleviates a large part of a Recurring Revenue SaaS business’ working capital needs to grow more effectively and efficiently…without excessive dilution.
If you are looking to raise capital for your startup, choose RevTek. Our experienced team can provide you with the money you need to expand your tech startup. Contact us today to learn more about how we can help your business grow.
