Venture debt is a risk loan primarily designed to fuel expansion, similar to a traditional bank loan. It is provided to ensure that startups can support ongoing growth and maintain financial liquidity between equity rounds. Venture debt follows venture capital.

Learn more about venture debt here.

re:cap provides alternative debt financing for SaaS and subscription-based companies. With re:cap, companies secure funding through debt instead of selling shares for equity financing, enabling them to retain ownership of their company. 

The customization of re:cap's funding options allow startups to meet their capital needs precisely when they arise. Since this flexibility is possible on a monthly or daily basis, it prevents overfunding, which otherwise would have implications for the cost of capital and capital efficiency.

Differences:

• Venture debt only provides funding to companies starting at the growth stage, and not before. re:cap funding provides funding at all company stages.
• Venture debt comes with several restrictions, such as covenants, securities, and often warrants, which can lead to company dilution. re:cap funding, on the other hand, doesn’t come with any of these and it is fully non-dilutive.
• The process of obtaining venture debt is often as lengthy as obtaining equity financing and can take several months. With re:cap, however, once approved, companies can get funding within two business days.
• Obtaining venture debt financing comes with a lot of expenses: only fixed costs are already between 8%-20% p.a., with additional fees (eg. closing fees, legal fees) of more than €100k. With re:cap, fixed costs are between 2%-15% interest on each financing, and there are no additional fees.
• Venture debt requires a lot of fixed commitments in terms of repayment, whereas with re:cap companies can adjust their financing plans to better adapt to changes in the market environment – or simply if their business plan changes.

Similarities:

• Neither re:cap or venture debt require a startup to demonstrate a break even point, nor to have tangible assets.
• Both re:cap and venture debt funding are paid back in monthly instalments, typically over a period of less than five years.
• Companies can use both re:cap or venture debt funding for similar use cases. For example, for building a bridge to profitability or postponing a VC round. 
• Both are a good alternative to traditional bank loans, which are usually not attainable for startups

Read this article to learn more about venture debt for startups.

• Subscription business model: Your business generates predictable recurring revenue.
• EU-based company: Your legal entities are at least partly located in Germany or the Netherlands.
• Sufficient runway: You have at least six months of runway, or are profitable / close to break even when drawing the funding.

re:cap works as a financing line within which you draw as much funding as you need, whenever you need it. The financing limit will be increased based on the growth of your business and the track record on the re:cap platform.

Based on your business plan, we can provide you with different funding scenarios that help your company get money without risking unnecessary capital costs due to overfunding.

re:cap is adaptable for many different use cases. Our customers use our funding to extend their runway, postpone equity fundraising, accelerate their growth, optimize their cash flow, or finance M&A. 

Check out our case studies to learn more about how to use re:cap.

Once approved, the funding will typically arrive in your bank accounts within two business days.

Our platform allows you to send a request in minutes, and receive funding and growth guidance in days, not months. You can get started in three easy steps:

1. Set up your account and seamlessly connect your financial data sources, including bank accounts, revenue streams, and accounting systems.
2. Get approved by our underwriting, receive your terms, and – if needed – use re:cap guidance where our experts tailor different funding scenarios matching your business plan.
3. Use your financing line as your business needs it.