Why revenue-based financing matters

Capital planning in SaaS has taken a hard turn.

The raise → spend → repeat era is dead, and the CFO's reality now looks more like:

• Capital is more expensive
• Investors want efficient, durable growth
• NRR matters more than top-line ARR
• GTM is slower, and buyers are more selective
• Runway discipline is non-negotiable

To operate in this reality, CFOs are seeking flexible, non-dilutive funding models that align with actual revenue performance, not outdated 12-month budget assumptions.

That is precisely where revenue-based financing (RBF) and ARR-based financing show up as powerful tools when used correctly.

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What revenue-based financing actually is (and isn't)

Revenue-based financing is a form of non-dilutive funding where repayments adjust dynamically with your actual revenue.

Instead of fixed repayments (like debt) or selling equity, you repay as a percentage of future revenue or via draw-and-repay ARR-linked mechanisms.

Two dominant models in 2025
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1. “Classic” revenue share model (Traditional RBF)
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• You receive capital upfront
• You repay monthly as a % of revenue
• Payments fluctuate with sales
• You stop paying when you reach a cap (usually 1.3–1.7× the advance)

For B2B SaaS, it’s rarely the model of choice for scaling.
It wasn’t designed around predictable subscription revenue and ARR planning, and it also makes the true cost hard to pin down because you don’t know exactly when you’ll hit the cap. That’s why most modern SaaS CFOs now prefer ARR-linked structures with clearer pricing and planning.

2. ARR-based financing (Fits SaaS)

ARR-based financing is the version of revenue-based financing designed for subscription businesses. At its core:

• Capital is linked to your ARR/MRR
• Facilities can grow as ARR grows
• Provides more flexibility in how terms are set
• Typically more cost-efficient for SaaS than classic revenue-share models

It’s the operator-grade evolution of RBF built for recurring revenue, not volatile one-off sales cycles.

But not all ARR-based financing is created equal. A lot of it is still structured like a fixed-term loan:

• rigid amortisation
• fixed schedules
• little flexibility on when or how you draw

We think it has to work differently.

At Float, we link funding to ARR through a flexible credit facility that scales as you grow. You draw when you need it and pay for what you use. Each draw can have its own terms that you tailor including grace periods and repayment rhythm, so capital moves with your GTM motion and cashflow, not a generic template.

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Why SaaS CFOs are turning to revenue-based financing

• Traditional equity markets are cautious.
• Venture debt is selective and rigid, and often comes with equity components that increase the true cost.
• Bootstrapping alone is too slow in competitive markets.
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RBF fills the middle ground:
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• non-dilutive
• flexible
• usage-based
• linked to real operating performance
• faster and less bureaucratic than bank credit — typically takes ~2 weeks
• simpler to model than structures with covenants, warrants, or dilution obligations

But the biggest reason?

It supports operator-led capital planning.

Spend expands when NRR and GTM efficiency say it’s smart, not when an annual budget says it might be.

This puts CFOs back in control not investors, not markets.

When revenue-based financing makes the most sense in SaaS

Operator-led CFOs use RBF when these conditions are true:

1. You have predictable, and growing recurring revenue

If your ARR is stable, seasonal but predictable, or growing steadily even modestly, ARR-based financing fits naturally.

2. Your NRR is healthy or improving

High NRR = durable customer base = lower risk = better terms.
Even improving NRR signals strong retention fundamentals.

3. Your CAC payback is reasonable

You don’t need perfect efficiency — just clarity.
If you know your payback window, you can match capital to GTM velocity.

4. You want optionality

Operator CFOs don’t want to commit to big chunks of debt or unnecessary equity dilution.
Float = draw when needed, pause when not, pay for what you use.

5. You have a short-term opportunity that equity can’t justify

Examples:

• Accelerating a product launch
• Capturing a hiring window
• Expanding a proven GTM play
• Expanding into new markets
• Increasing paid acquisition with clear payback
• Bridging to a stronger round

This is where RBF shines: fund real, validated opportunities, not speculation.

When revenue-based financing is not a good fit

RBF works best when the foundations are in good shape. It’s worth pausing or reconsidering (for now) if:

❌ Your churn is high / NRR is weak

If NRR < ~90%, terms will be worse and obligations can add pressure to an unstable revenue base.

❌ You’re pre-revenue or very early (< €20–30k MRR)

Without predictable ARR/MRR, pricing risk becomes hard, and offers become expensive or unavailable.

❌ You have no or negative growth

If revenue is flat or shrinking, RBF increases pressure rather than creating options.

❌ Your burn is very high relative to revenue

If you’re consistently burning more than ~50% of revenues with no efficiency plan, RBF becomes a band-aid instead of a strategy.

❌ You’re using it to hide a broken GTM motion

No funding model can fix:

• poor qualification
• low win rates
• weak ICP
• founder-led sales

RBF amplifies working engines — it doesn’t rebuild them.

❌ You’re hoping “growth at all costs” comes back

RBF is designed for efficient operators, not for restarting zero-rate blitzscaling.

How RBF fits into a modern SaaS capital strategy

The strongest SaaS companies going into 2026 don’t rely on one funding source.
They build a layered capital strategy combining external capital (equity + credit) with internal capacity (cashflow + incentives).

A modern operator-led capital stack looks like this

1. Equity → Strategic, long-horizon capital

Used for parts of the journey that can’t yet be funded by recurring revenue or shouldn’t have repayment pressure:

• early-stage build (<€20–30k MRR)
• category creation
• multi-year R&D
• long product cycles

It’s the “big bet” layer, powerful but expensive.

2. ARR-linked financing (Modern RBF) → Flexible growth capital

Used to:

• fund hiring into roles with clear impact
• scale proven GTM motions
• back expansion where you already see traction
• extend runway before fundraising

It works in both steady and high-growth environments as long as burn is reasonably aligned with revenue.

The job: fund what’s working, not manufacture growth or patch a broken P&L.

3. Venture debt → Structured, later-stage capital

Used when:

• the company has raised meaningful equity or is close to profitable
• ARR and performance are predictable
• there is a large, defined use case (acquisition, infra, big-swing initiative)

It’s covenant-driven, more rigid, and best for scaling what’s already de-risked — not for experimentation.

Supporting sources

Operating cashflow → Funds day-to-day activities

Covers predictable expenses such as salaries, infrastructure, and core burn.
Not a capital instrument, it’s the base layer.

Grants & tax credits → Opportunistic boosts

Examples: R&D tax credits, innovation grants.
Extend runway but do not act as recurring capital.

What CFOs learned in 2025

Runway isn’t a safety net — it’s a strategic weapon.

ARR-linked funding helped operators extend runway on their terms:

• without giving up ownership
• without taking rigid debt packages
• without betting that equity rounds arrive on time

It let CFOs fund what’s working, slow down when markets shift, and raise equity later at stronger valuations.

How SaaS CFOs use revenue-based financing in practice

Here are the most common real-world use cases in 2025.

1. Extending runway without raising equity early

Scenario:
You want 6–12 months to improve NRR, CAC, or GTM efficiency.

RBF gives breathing room without:

• dilution
• down-round risk
• milestone pressure

2. Funding GTM expansion based on real performance

Smart CFOs pair RBF with:

• payback windows
• pipeline momentum
• repeatable playbooks
• NRR expansion readiness

You fund what’s working, not what you hope will work.

3. Hiring ahead of revenue safely

When recruiting lags behind ARR growth, RBF closes the cash flow timing gap.

4. Supporting product launches with clear monetisation potential

Use capital for:

• pricing changes
• usage add-ons
• tier expansions

If you can model the uplift, RBF can fund the ramp.

5. Smoothing seasonal or cyclical revenue

ARR-based financing helps:

• offset seasonal dips
• fund upgrades and expansions
• maintain GTM momentum

Especially valuable in verticals like hospitality, education, and HR.

How to assess “Good Fit” for revenue-based financing (CFO checklist)

A CFO should confidently answer YES to:

• Do we have predictable ARR?
• Do we understand CAC payback?
• Do we have clear plans for the capital?
• Will the investment improve NRR, efficiency, or runway?
• Can we model repayment scenarios?
• Does this increase optionality instead of pressure?

If yes, RBF is likely a strategic advantage.

How Float fits this scenario

Float is built for operator-led finance.

We link funding to ARR and give you flexibility in:

• how you draw
• when you draw
• how each draw is structured

Each tranche can match your GTM cycle and cashflow reality.

The result:
Capital that supports predictable SaaS economics, not capital that dictates them.

If this sounds like the way you want to fund 2026, we’d be happy to explore whether we’re the right fit.

Contact us

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