Threshold capital provides revenue-based financing to European companies that allow them to scale your business without dilution, personal warranties and wasting time.
Revenue-based financing (RBF) is an alternative financing model in which companies raise capital based on future revenue. The RBF firm (like Threshold capital) provides a loan that is being repaid with a certain percentage of the recipient companies’ revenue. This arrangement continues until a predetermined amount is repaid in full or other conditions are fulfilled (like minimum interest rates).
Revenue-based financing loan where the company can decide when it wants to start the repayments and how high will be the revenue percentage share to be repaid on monthly basis The loan is for six years, but if repays sooner and reaches minimum interest rates, the company can be qualified for discounts.
The most popular funding options for businesses nowadays are VC and banks.
Unlike venture capital, Threshold capital offers founders the opportunity to raise crucial growth capital without giving up control of their business. Equity can be one of the most expensive ways of raising working capital, but many founders are also wary of subjecting their businesses to the interest rates of traditional debt.
When it comes to the differences from banks, Threshold Capital does not require business owners to sign any personal guarantees, which means that if something goes wrong, you do not risk losing your personal possessions. Moreover, unlike banks who require the same repayment amount each month, Threshold Capital’s repayments are flexible, allowing you to repay less in case your revenues decrease.
Threshold capital works alongside or instead of venture capital and was established to address the fact that, for many small businesses, venture capital is simply not the best way to raise finance. Instead, Threshold capital offers fair and flexible funding that can be used to finance a growing business without the founders having to give up equity or take on the burden of traditional debt.
We can provide capital to companies that are operating for at least 24 months and are generating at least 250,000 EUR of sales in the last 12 months. Our product is particularly relevant to companies in the digital service companies, SaaS, direct-to-consumer, gaming as well as app development and much more.
To see if your business qualifies, fill our 2-minute registration form on our homepage, and we will get back to you within 24 hours to confirm your eligibility.
We understand that your business will fluctuate from month to month, so our repayments are tied to your sales. We agree on a percentage of revenue with you, which you will then share with us until the return cap is repaid. This means that if the market slows or your sales drop, your repayments will slow (or stop) too.
Repayments will begin on the date agreed between us usually between 0 and 12 months after the financing has begun.
Most businesses share 2-20% of future revenues. We’ll agree on the final percentage individually based on your business needs.
Revenue-based financing, sometimes known as royalty-based financing, was used by oil investors in the early 20th century to finance oil and natural gas exploration and later by the pharmaceutical industry, Hollywood, and energy companies. Investors began applying it to early-stage companies in the 1980s. Revenue-based financing blends the best of bank debt and venture capital, and a company should expect the cost of capital to fall within that range.
Our revenue-based financing model is best suited for companies currently generating at least 250,000 EUR in annual revenue. If you’re a pre-revenue startup, you can still register online so that we can keep you on our radar.
Unlike a traditional loan, revenue-based financing doesn’t have a set payment amount each month. Instead, you pay a percentage of your revenue. If your revenues are higher than expected, your payments go up accordingly (up to minimum interest rate), but if your revenues decrease, your monthly payment goes down.
No. Angels and VCs tend to respond positively to revenue-based financing. It gives your company more leverage without diluting equity, which future investors like for two reasons. The first is dilution, all shareholders hold a bigger pie for them, the second is simplicity as our financing is not a valuation event.
Many of our clients have used our funding to scale their companies and earn better term sheets from prospective investors, and many of our clients have gone on to raise VC funding.
We believe it’s fare to share your upside till some point. When you company is growing faster than you planned and our repayment in the specific time could mean a crazy interest rates (easily to 40-50% p.a.).
We don’t like that, so we created threshold for repayment of your return cap. This interest rate will be agreed with you after we understand your business. The best way is to register your company with us.
Yes, you can pay back anytime, even better we will report you on monthly basis who much you should pay to bay as the minimal interest for qualifying for discount. We believe to be partners and when we can reach our both goals is long-lasting win-win collaboration.
Our funding is ideal for companies who are planning to raise equity capital in the future or who want to scale faster without losing equity. If you are planning to raise capital, our funding can be a non-dilutive growth boost to help you push your valuation before the next equity financing. If you are not planning to raise capital, you can use our funding to simply grow faster.