Executive Summary
- Revenue-based financing (RBF) is debt repaid as a fixed share of monthly gross revenue, usually 2% to 10%, up to a cap of 1.3 to 2 times the amount financed. It involves no equity dilution and no board seat, and repayments rise and fall with revenue, although a slow month can still strain a business.
- The market is young and forecasts vary widely, from $9.8–11 billion by 2025 and $15.86 billion by 2026 to more than $200 billion by the early 2030s.
- RBF also suits tokenised capital formation. Lenders already underwrite and monitor these loans on real-time revenue data, and the structure pairs naturally with milestone-based financing. Tokenisation could widen the investor pool, create a secondary market for paper now held on illiquid balance sheets, and give small and mid-sized investors transparent access to a relatively opaque part of private credit.
- Most private credit depends on periodic, backward-looking financial statements. RBF repayment follows revenue that is measured continuously, which makes it the private credit product most ready for tokenisation without new infrastructure.
The Workings of Revenue-Based Financing
With revenue-based financing, also known as revenue-based investment, funds are advanced to a company in exchange for an agreement to repay the funds plus a fixed percentage of the company’s revenue monthly, usually between 2% to 10%. A company generally repays the funds, plus the fixed percentage of revenue, until the amount repaid reaches a predetermined multiple (typically between 1.3x to 2.0x) of the funds advanced. Because repayment is directly tied to the company’s revenue, slower months result in smaller repayments, and, unlike debt and equity financing, there is no board seat, no equity dilution, and no obligations other than the payment of the fixed percentage of revenue. The repayment structure has also made this financing option attractive to companies that have predictable, recurring revenue, and, especially, well suited for subscription and SaaS companies.
A Still Developing Market Without Formal Definitions and Standards
Market size estimates for revenue-based financing vary considerably based on methodology and the definition of the market. Per Research and Markets, the global market for revenue-based financing was $9.77 billion in 2025, and is expected to reach $15.86 billion in 2026 at a 62.2% CAGR. A different report from Expert Market Research suggests the 2025 market size will be $11.05 billion, and estimates it will reach $169.56 billion by 2035 at a 31.4% CAGR. Other market research firms have put 2026 market sizes for revenue-based financing anywhere between roughly $3.8 billion and $18.8 billion. The ranges and variations within the estimates are informative, and signal that revenue-based financing is still a rapidly developing market with inconsistent and varying definitions.
What all estimates seem to agree on, is the rate of growth and the market drivers. According to multiple reports, a lack of access to conventional bank loans for small and growing businesses, aversion by founders to dilute their equity further, the increasing adoption of predictable and subscription-based business models, a shift in the digital and online economy, and advancements in lending and underwriting technology have all contributed to the rapid growth of the revenue-based financing market.
Why RBF Is More Verifiable than Most Private Credit
RBF providers build their underwriting and monitoring processes with continuous, objective performance data in a way that other private credit categories have not. More and more, RBF providers will connect directly to a business’s payment processors, accounting software, and bank feeds via API. From there, they will use AI to conduct credit assessment and analyze revenue in real time, to underwrite and monitor a business over the life of the financing. Traditional bank debt facilities and venture debt facilities are reliant on periodic, self-reported financial statements, and a lender’s trust in the borrower and relationship built over time to assure compliance with covenants.
This creates a different verification model. An RBF investor will not, primarily, base their confidence in repayment on a borrower’s reporting. Rather, the RBF investor will rely on data that the RBF provider can independently validate and verify in real time.
What Makes RBF Exceptional for Tokenization
We have consistently pointed to verification as the primary constraint on extending capital formation beyond relationship-based networks. It’s the reason why patient capital remains situated largely within deep tech and other ventures with similar structural needs, why sovereign wealth funds continue to largely overlook smaller opportunities, and why family offices remain restricted to traditional investment avenues, including tokenized assets, all of which stem from the inability to independently verify opportunities. RBF solutions have already grappled with and solved a version of this challenge at the platform level, as the repayment mechanism is tied to real-time data rather than self-reporting. Translating this verification to a tokenized representation of RBF would, in effect, remove the barrier for tokenizing other, less transparent, and more opaque asset classes.
Tokenizing RBF: What’s Possible?
RBF can be easily distributed to a broader market. Currently, the vast majority of RBF is raised by a relatively small number of specialize platforms and funds. Traders in this asset class include Decathlon Capital Partners, Lighter Capital, and Flow Capital Corp. Compared to borrowers, this investor base is far more restricted. Tokenization of RBF could provide otherwise restrictive capital sources the confidence to participate based upon verification data collected by specialize platforms rather than requiring each capital source to establish its own underwriting relationship to every borrower.
There are two elements critical to realizing the real upside potential of RBF: risk and liquidity. RBF paper currently represents largely illiquid assets for the originating entities. There is limited secondary market activity for this paper. A tokenized structure, where title and repayment are built into the instrument itself, supports secondary market activity in a way that is difficult to achieve with more opaque private credit. Given the right structure, genuine secondary market trading of RBF would be possible. Furthermore, by providing independent verification of the originator, Title Insurance, and Repayment Assurance for RBF, a secured claim, and an equity interest, a much broader class of capital would be available for the underserved growth-stage, missing-middle companies. A tokenized structure could allow RBF to support the full potential of growth-stage, missing-middle companies identified in the companion research in this series.
What makes revenue-based financing (RBF) easier to verify than other private credit?
RBF providers connect via API to a business’s payment processors, accounting software, and bank feeds. RBF relies less on periodic, self-reported financial statements, like bank loans and venture debt, and more on real-time revenue and AI-based underwriting.
What makes RBF easier to tokenize than other private credit?
RBF’s repayment obligation is naturally tied to real-time revenue. Verifying RBF through a token would require less structural changes than other private credit, which may rely more on self-reporting.
What would tokenizing RBF change?
Primarily it would expand the investor base from the few, concentrated RBF funds and provide liquidity to an otherwise illiquid asset.
Frequently Asked Questions
1. How does repayment work for revenue-based financing?
A business repays a fixed percentage of its monthly revenue, usually 2-10%. The repayment continues until the total repaid is equal to a predetermined multiple of the funding amount, typically 1.3 to 2 times. Revenue-based financing does not require equity, a board seat, or a fixed monthly payment that is independent of actual monthly revenue.
2. What is the current size of the revenue-based financing market?
Current estimates differ significantly, ranging from about $9.8 to $11 billion in 2025, to over $15.86 billion in 2026, and even higher in the early 2030s. The differences reflect varying market definitions. All estimates, however, show strong and continuous market growth.
3. Why is revenue-based financing considered to be easier to verify than other private credit?
RBF providers connect to a company’s payment processors, accounting software, and bank feeds via API in order to obtain real-time revenue data and use AI-powered underwriting models, as opposed to relying on periodic, self-reported financial statements like the majority of bank loans and venture debt facilities.
4. What makes revenue-based financing (RBF) more amendable to tokenization than other forms of private credit?
Although RBF still hinges on self-repayment, the obligation is mechanically tied to real time, continuously verifiable, revenue data. Therefore, extending verification of the self-repayment claim to a tokenized representation of the debt requires little structural adjustment as compared to other less transparent assets.
5. What would tokenizing RBF actually do?
It would primarily widen the investor base of the RBF asset class beyond the current handful of specialist RBF investment firms, and create bona fide liquidity for RBF paper on balance sheets by enabling inter-firm trade.
Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Readers should conduct their own research and consult with qualified professionals before making any investment or business decisions.