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Almost 30% of SMEs in the US have no outstanding debt. These companies may be bootstrapped or diluting their equity by bringing in VCs–but there’s a better way to access capital.
Companies like Lighter Capital offer various alternative funding options. If you’re a startup looking to retain full control of your company while bringing in capital to fuel growth, a company like Lighter Capital may be able to help.
In this article, we’ll review Lighter Capital’s offerings, how the products are structured, and the pros and cons of raising capital through Light Capital. We also review alternatives that offer different terms, amounts and funding speeds, and operate in different geographies.
Let’s dive in.
About Lighter Capital
Lighter Capital, founded in 2010, offers startups non-dilutive funding and is backed by NAB Ventures and Voyager Capital. They offer revenue-based, term-based, and contract-based financing to businesses in the US, Canada, and Australia.
All of these options give startups the option to access capital without trading equity. Founders can choose a funding option that fits their needs based on their revenue stream and cash flow.
Lighter Capital Review
Let’s dive deeper into Lighter Capital’s alternative funding solutions. As you’re reading the review, run your numbers assuming you’ve partnered with Lighter Capital to assess if they’d be the right financing partner for your startup.
Lighter Capital Products & Offerings
Qualified companies can get capital funding from Lighter Capital up to $4M USD or $1M AUD. You can choose revenue-based financing where your monthly payments are a factor of your revenue, term-based loan where your monthly payments are constant, or contract-based financing where your monthly payments are a factor of your contracted cash flow.
Here’s an overview of Lighter Capital’s products:
- Revenue-based: Lighter Capital offers capital based on your monthly recurring revenue (MRR) for up to three years. The monthly payments are a percentage of your monthly revenue.
- Term-based: This product is more like a traditional loan. Lighter Capital offers you capital for up to three years and the monthly payments are consistent.
- Contract-based: Contract-based capital is a product that funds short-term contracts (less than one year) where you need upfront capital. Payments are based on your monthly cash flow.
Lighter Capital Eligibility
Lighter Capital considers applications from companies that meet the following criteria:
- Your company is in the US, Canada, or Australia.
- Your startup generates recurring revenue of at least $200K from software, SaaS, tech services, or a similar sector.
- You have a diverse clientele (note: diverse is not further defined on Lighter Capital’s website).
Lighter Capital Rates & Fees
Lighter Capital doesn’t share a blanket rate or fee for its products. According to the website, the repayment cap varies between 1.3–1.5X the funded amount, depending on the health and stage of your business.
How to Apply
If you meet the eligibility criteria, the first step is to apply online via Lighter Capital’s website. After you apply, a Lighter Capital investment advisor meets with you to discuss the amount of capital you need and whether you qualify.
The next step is to share your financials with Lighter Capital so they can determine the amount of capital you qualify for and the requirements to complete the process.
Lighter Capital Pros
- Up to $4M in financing
- Non-dilutive financing options
- Additional benefits like an extensive partner network, warm intros, and software discounts
Lighter Capital Cons
- Funding is only available in the US, Canada, and Australia
- Higher ARR threshold, and targeted to larger companies
- A lengthier time to disbursement (3-4 weeks) compared to competitors
- The repayment cap varies between 1.3–1.5X of the funded amount represents a higher APR than some of their competitors
Lighter Capital Reviews
There aren’t many online reviews of Lighter Capital. There are a few testimonials on the website. The service has also been widely covered in news and online business publications. These factors and the lack of negative reviews indicate that Lighter Capital is a good service provider.
However, Lighter Capital’s rates can be higher than other providers, with a longer time to funding, so it could be worth it to consider some Lighter Capital alternatives.
Lighter Capital Alternatives: Quick Overview
Lighter Capital Alternatives: Complete Review
Multiple financiers in the market offer revenue-based or term-based financing. If Lighter Capital’s funding speed or eligibility requirements don’t look like a great fit for you, here are some top options to consider:
- Efficient Capital Labs
Efficient Capital Labs (ECL) offers growth capital to B2B SaaS companies across 15 countries - companies must have or be open to creating an entity in the USA. The company is headquartered in New York and has operations across the US and India.
You can get up to 65% of your annual recurring revenue (ARR) with a simple and clear fee structure—10–12% (USD) or 12–15% (INR). The service funds companies in USD and INR—you can pick a currency based on your cash flow needs.
ECL funds out of its own $100M debt facility, ensuring consistency and availability of funding for its customers. ECL has a 75% + repeat customer rate, evidencing the benefits it offers founders.
Services & Offerings:
- Non-dilutive capital up to $1.5M
- Flat and transparent financing fees
- 12-month repayment terms
- Funds within three days
- Low rates and accessible offers
Lighter Capital vs Efficient Capital Labs
ECL offers funding to earlier-stage companies and offers market-leading rates, making it more cash-flow-friendly than Lighter Capital. You can get funding within 72 hours and choose an easy 12-month repayment plan–while Lighter Capital takes weeks to months to underwrite and disburse cash to your bank account.
Lighter Capital’s maximum borrowing amount is higher at $4M. ECL has a strong capability in underwriting cross-border businesses.
If you’re undecided between Lighter Capital and ECL, project your cash flows over the next 12 months using each financier’s terms and rates and see which one is more cost-effective. One way to do this is to calculate your APR (annual percentage rate) on each financing option, which will help you to better compare rates. ECL offers an application experience with a commitment to transparency and quick disbursement.
- Founderpath
Founderpath offers SaaS business funding up to $4M. You can choose between revenue-based financing (called factoring agreements) for a discount rate of 7% or more or a term loan at a 16% or higher interest rate. The payback period ranges between 12 and 30 months for a factoring agreement and 12 and 48 months for a term loan.
Services & Offerings:
- Non-dilutive funding up to $4M
- Revenue-based and term-based funding options
- Has additional tools to value SaaS businesses and track SaaS KPIs
Lighter Capital vs Founderpath
The most striking point of difference between Founderpath and Lighter Capital is access to its suite of software tools. The choice boils down to your needs and, of course, the terms you get from the financier.
- Uncapped
Uncapped relies on historical sales data to qualify applicants. You can connect your payment platform with Uncapped to share your sales figures. Once handed over to Uncapped, its algorithm processes this data to determine the amount of funding you’re eligible for—no credit checks or manual applications necessary.
Services & Offerings:
- Funding up to €10M
- Offers term-based financing and line of credit
- Easy access to capital for Amazon sellers
Lighter Capital vs Uncapped
You can get funds for your Amazon eCommerce business and fixed-term funding or a line of credit for your SaaS company. The eligibility criteria and rates differ for all products. However, Uncapped doesn’t offer revenue-based financing like Lighter Capital. Uncapped has a greater presence in European markets, whereas Lighter Capital focuses on USA, Canada, and Australia.
Amazon FBA sellers benefit the most from Uncapped since most other platforms only fund SaaS and tech businesses. If you want to learn more, we have an extensive Uncapped Review you might want to check out.
More About Lighter Capital
Here’s some additional information about Lighter Capital and its products:
What is non-dilutive capital for startups?
Non-dilutive capital refers to funding that doesn’t require you to give up equity in your company. Early-stage startups use non-dilutive capital so they can fuel growth while retaining full control over the business.
With equity financing, there’s a risk that you might raise too much capital and give away a large portion of your equity or raise too little to grow at full speed.
Non-dilutive funding options offer more flexibility. You never have to worry about raising too much because you don’t lose equity. Since there’s a fixed repayment schedule, you always know what the loan is going to cost you in the long run.
Who is the CEO of Lighter Capital?
Melissa Widner is the CEO of Lighter Capital.
Is Lighter Capital legitimate?
Yes, Lighter Capital is legitimate. The company has been around since 2010 and has a good reputation in the market. In fact, Lighter Capital recently (in August 2023) raised $130M for a credit facility to help startups through non-dilutive financing.
Choose the Best Lighter Capital Alternative
While Lighter Capital is a solid financier, companies should assess the target rate they would like to get and the speed at which they need financing, to make their decision regarding which funding provider to partner with.
If you’re a B2B SaaS startup needing fast (3-day) access to capital, or are below the minimum ARR requirements which Lighter Capital has in place, explore Efficient Capital Labs to fund your growth and value transparency and speed.
ECL’s $100M debt facility, experience with clients across geographies, and founder-friendly rates help you scale with confidence.
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