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4 Tips for Landing Revenue-Based Financing No profit? No assets? No problem.

By Michelle Goodman

This story appears in the March 2015 issue of Start Up.

Terry Manier
On solid ground: John Stewart of Cloudbilt.

John Stewart knew his company needed a hefty cash infusion to transition from a cloud services provider to a software provider. Without physical assets to borrow against, a bank loan was out of the question; venture capital wasn't an option, either. "We were too late for angel funding and too early for growth funding," says Stewart, CEO of Charlotte, N.C.-based Cloudbilt.

His solution: borrow $1 million from Lighter Capital, a Seattle financing firm that specializes in revenue-based deals with small businesses poised for big growth. Rather than forfeit equity or repay a fixed monthly amount, Cloudbilt pays Lighter Capital 7 percent of its monthly revenue. The more the company makes in a given month, the faster it repays the debt.

Thanks to the money borrowed, which Cloudbilt sank into sales and marketing, the company turned its business model on its head. In 2012 Cloudbilt had revenue of $1.9 million, $600,000 of which was in software sales, Stewart says. In 2013 the company made $4 million, $3.6 million of that in software deals.

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