Many Indian-based consumer brands are taking the market by storm. Some of these include Bewakoof, SMOOR, TagZ Foods, Pipa Bella, JhaJi, and Berrylush. These names are synonymous with success and have a shared secret to their growth - they all utilised the innovative Revenue Based Financing model to secure the capital they needed to thrive in their respective segments.

India's D2C sector is thriving and it's no surprise that within a few years over 600 D2C brands have emerged in India that generated a combined revenue of ₹14,000+ Cr. Growing at 40% CAGR the journey for Indian D2C brands is only upwards. Also, the emergence of D2C enablers in technology, shipping, payments, warehousing, and financing has made lives easier for D2C founders.

However, there is still one area where most D2C founders face difficulty, and that is access to capital.

Traditional forms of capital like bank loans that cater primarily to asset heavy businesses are not suitable for asset light D2C business.

Another option for founders is to avail D2C venture capital which often requires significant equity dilution.

D2C venture capital is great if a brand is looking at expansion or acquisition but is not advisable for recurring expenses like inventory, marketing, and operations.

Therefore, banks are no longer a factor for D2C funding in India, and accepting private investment requires giving up significant ownership. Fortunately, there is a better approach out there. Revenue-based financing has become a powerful alternative funding strategy, especially for D2C players in their early stages.

Revenue Based Financing is a way to raise capital that enables businesses to get funded based on their Monthly Recurring Revenue (MRR). It is a flexible financing option as businesses need not pay a fixed EMI nor dilute equity. They need to pay a fixed percentage of their monthly revenue. So a business pays less during lean months and more during high growth months, ultimately paying it off sooner than the whole tenure.

Investors skin in the game

Revenue Based Financing is a way to raise capital that enables businesses to get funded based on their Monthly Recurring Revenue (MRR). It is a flexible financing option as businesses need not pay a fixed EMI nor dilute equity. They need to pay a fixed percentage of their monthly revenue. So a business pays less during lean months and more during high growth months, ultimately paying it off sooner than the whole tenure.

Zero equity dilution

This is possibly the main factor contributing to the rising popularity of Revenue Based Financing. RBF is great to fund D2C businesses recurring expenses like inventory, marketing, and operational costs. Raising equity rounds for these can become extremely expensive in the long run. Zero equity dilution feature lets you own your D2C business completely with no obligation to give up any share or board seat.

Faster processing than traditional sources

Before a contract is finalised, it may take months or even years to pitch to venture investors. But because RBF is based on automated underwriting and doesn't need lengthy documentation or equity exits, money can be approved and distributed in as little as four weeks.

Opens the door to growth opportunities

Capital raised via Revenue Based Financing lets you grow your D2C business. The capital can be used for inventory, marketing, hiring, and other business areas. Post achieving newer milestones, the D2C business can go on to raise larger rounds from VCs for additional growth, expansion or acquisitions.

How can D2C brands raise Revenue Based Financing?

D2C brands can raise fast, flexible, and founder-friendly Revenue Based Financing with Klub.

Klub enables you to raise up to ₹30 Cr in less than 48 hrs! Read more here.