According to a recent report published by Allied Market Research, titled, “Revenue-based Financing Market by Enterprise Size and Industry Vertical: Opportunity Analysis and Industry Forecast, 2020-2027,” the global revenue-based financing industry size was valued at $0.90 billion in 2019, and is projected to reach $42.34 billion by 2027, growing at a CAGR of 61.8% from 2020 to 2027.
Revenue-based financing (RBF) allow startups with another option beyond venture capital to fund their business growth. In addition, this type of financing largely benefits companies that demonstrates stable growth, recurring revenues, and strong margins. Moreover, RBF introduces companies to risks of debt, provides less capital than venture capital funding, and offers flexible interest payments & anti-dilution components for startups, small businesses, and medium-sized enterprises.
Factors such as surge in demand among investors to earn more profits, increase in need for faster & quicker fund raising than conventional banks, and rise in adoption of revenue-based loans by large number of start-ups & small businesses drive the revenue-based financing market growth. In addition, as startups & small businesses are adopting & implementing technologies in their business models, revenue-based financing solutions providers have numerous opportunities to expand existing product lines and offer value added services to their customers.
On the basis of industry vertical, the IT & telecom segment dominated the revenue-based financing industry in 2019 and is projected to maintain its dominance during the forecast period. This is attributed to the fact that massive growth in number of startups such as telecom, platform-as-a-service (PaaS), and software-as-a-service (SaaS) companies demanding for revenue-based business loans. This is a major growth factor for the IT & telecom segment in the market.
By region, the global revenue-based financing market share was dominated by North America in 2019, and is expected to maintain this trend during the forecast period. Moreover, owing to presence of major market players providing revenue-based financing is growing rapidly, which is contrasting sharply with a decrease in number of early stage angel and venture capital (VC) funding in the region. However, Asia-Pacific is expected to grow at the fastest CAGR during the forecast period as several financial institutions are providing revenue-based financing to boost business efficiency, lowering business risk compliance, and supporting startups to sustain in the market.
In the wake of COVID-19 pandemic, the revenue-based financing market size has witnessed significant growth and is expected to grow at tremendously in the upcoming years. Moreover, in order to curb the spread of virus, several key players in the market has launched & developing digitalized revenue-based financing solutions. As startups & small businesses have switched to adopt online financing platforms and are streamlining & updating existing business model to sustain in the market. Therefore, these are becoming major growth factors to the revenue-based financing market during the global health crisis.
Key findings of the study
- By enterprise size, the small-sized enterprises segment led the revenue-based financing market size, in terms of revenue in 2019.
- By industry vertical, the IT & telecom segment accounted for the highest revenue-based financing market share in 2019.
- By region, North America generated the highest revenue in 2019.
- The key players profiled in the revenue-based financing market analysis are Capria Ventures LLC, Decathlon Capital Partners, Fleximize, GetVantage, Ken Capital Technologies Pte Ltd, Lighter Capital, SABINE CAPITAL PARTNERS, LLC, SaaS Capital, Uncapped Ltd., and UPLIFT1. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.