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Software & SaaS

Growth debt for software companies

SaaS companies don't have hard assets to pledge — they have recurring revenue, strong retention, and predictable unit economics. Growth debt lenders underwrite against those metrics instead.

Venture debt

Term debt for venture-backed SaaS companies. Typically 3–4 year term, interest-only period, with warrants (1–3% of fully-diluted equity). Lenders look at: total equity raised, runway, revenue trajectory, and investor quality. Best for: post-Series A to pre-IPO companies with strong VC backing.

Typical size: $1M–$50MExample lenders: Silicon Valley Bank, Hercules Capital, TriplePoint, Western Technology Investment, Horizon Technology Finance

ARR-based lending

Debt sized as a multiple of annual recurring revenue (ARR). Lenders underwrite based on gross retention, net retention, churn, and customer concentration. The collateral is the recurring revenue stream itself. Best for: SaaS companies with $3M+ ARR and 100%+ net revenue retention.

Typical size: 3-6x ARR, typically $2M–$100MExample lenders: SaaS Capital, River SaaS Capital, Espresso Capital, TIMIA Capital, Lighter Capital

Revenue-based financing (RBF)

Flexible repayment as a percentage of monthly revenue — payments scale up and down with the business. No warrants, no board seats, no personal guarantees. Typically more expensive than venture debt but less restrictive. Best for: bootstrapped or lightly-capitalized SaaS companies with predictable revenue.

Typical size: $50K–$5M (typically 20–33% of ARR)Example lenders: Capchase, Pipe, Founderpath, Clearco, Wayflyer

Equipment / infrastructure financing

Debt secured by servers, networking equipment, or other hard assets. Lower rates than unsecured growth debt because the lender has collateral. Best for: SaaS companies with significant infrastructure spend (hosting, data centers) or hardware-enabled SaaS.

Typical size: $100K–$10M based on equipment valueExample lenders: Equipment finance specialists, some bank leasing desks

The tradeoff: dilution vs cost

Growth debt costs more than bank debt but less than equity dilution. If your revenue is growing 50%+ year-over-year, the cost of debt is trivial compared to the equity value you preserve by not raising another round.

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