The software world is undergoing great changes: the SaaS model is gradually becoming the new standard. Accessible anywhere and everywhere, day and night, its promises are winning over users, be they individuals or companies. The only downside for SaaS companies is cash flow! There’s a gap between the point when you need to make investments to grow your business and the moment you receive the funds from customer subscriptions.
How can you optimize your cash flow? Or finance your growth? In this article, we reveal an innovative financing method that enables you to turn your monthly subscriptions into immediate cash flow.
A number of SaaS companies face the problem mentioned above, known as the cash flow gap. This gap is particularly prevalent in the SaaS model since the monthly subscriptions you sell bring in regular but modest amounts of money. Your immediate cash flow is limited and your attempts to grow or develop the business are restricted.
So how can you reduce this cash flow gap to accelerate your growth? You’ve actually got four options:
And what if none of these options appeal to you right now? There is yet another method of financing available that will accelerate your growth. It’s innovative, and it enables you to transform your monthly subscriptions into instant cash. It's called Revenue-Based Financing, and we'll tell you about it right now.
First, let's take a quick look at the concept of Revenue-Based Financing (RBF). RBF enables a company to obtain financing in 24 to 48 hours, on a non-diluted basis, with repayments adjusted according to the revenue attained.
Since its introduction in 2015, RBF has quickly become very popular in North America. Good news: this financing method is now available to European entrepreneurs. Silvr, a pioneer in RBF in Europe since 2020, has already supported around 100 entrepreneurs.
So what's in it for your SaaS? You may have already guessed the main benefit of RBF, but let's spell it out: you can receive future revenue immediately. Charles Tiger, ex-Partech and now Investment Analyst at Silvr, explains further:
“We enable SaaS companies to annualize their monthly subscriptions. That means you continue to sell monthly, while receiving maximum value right away to invest in your growth. You boost your cash flow and maximize the value of your ARR (and, therefore, your valuation).”
Charles Tiger, Investment Analyst at Silvr
It’s actually very simple:
The cash flow gap is a problem native to the SaaS model. There are several solutions to finance yourself and get around it in order to accelerate your development. The Revenue-Based Financing allows you to bridge this gap by transforming your monthly subscriptions into immediate cash flow... and by giving you the means to invest for your growth!
Do you have a financing need? Come and talk to our team.