Equity Financing and Debt Financing: A Strategic Duo for SaaS Companies

equity financing and debt financing

For SaaS companies and their invested parties — attorneys, CPAs, growth advisors, and more — finding the right funding to support swift, sustainable growth can prove difficult in the current funding marketplace of bank loans, equity financing and debt financing. 

2023 has witnessed hiking interest rates and the collapse of the Silicon Valley Bank, which left many SaaS companies hesitant to rely on institutional funding and made bank loans even more difficult to obtain. Venture capital deals continue to slow despite the projections of massive funding availability, and the fierce competition for funding forces early-stage SaaS companies to sacrifice more equity when they can obtain a deal. Though venture debt continues to prove fruitful, some companies want the freedom to combine funding mechanisms, particularly as they grow. 

If you’re seeking strategic funding sources for your client, consider a hybrid approach. By combining equity financing and debt financing, your clients can be better positioned to accelerate their scaling and support their growth as their needs change and evolve. With the right provider, you can secure the funds your clients need from a single source, eliminating the delays and difficulties that can arise if your clients must seek additional funding down the line. 

Explore the value that combining equity and debt financing can bring and how River SaaS is equipped to support your clients through every stage of their growth. 

Combining Equity Financing and Debt Financing 

Venture debt is a powerful partner with equity financing because it helps address key gaps and challenges that arise when clients use equity alone. Equity financing can be difficult to obtain, and there’s an extended period of time with equity deals that leave your clients waiting for their funds to become accessible. This can stall growth initiatives and delay your clients from moving forward. Venture debt is faster, empowering your clients to act now. This helps accelerate their growth and helps them accomplish their goals faster. 

Equity financing is also less flexible in its terms and may come with unique stipulations on how the funds must be utilized. Venture debt is designed to be flexible, letting your clients put the funding toward the efforts they need most, whether that be marketing, sales, the development of new features like AI, or something new entirely. With the right partner, venture debt is also flexible in the ways it can be paid back so your clients can choose a funding structure that makes the most sense for them. With venture debt financing and equity financing, your clients can fund the avenues they need faster and more flexibly while still enjoying the benefits of equity financing down the road. 

Equity alone can be difficult to obtain, particularly for early-stage companies. With these rare deals, often more shares must be sacrificed, which can contrast with startup SaaS founders who want to maintain more ownership control in these critical stages. With debt financing and equity financing combined, your clients can use debt to fuel their growth in the earliest stages and utilize equity down the line to better manage dilution. Pursuing equity from the same source your clients turn to for venture debt also enables them to forge deeper relationships with a reliable, single-source funding provider. 

Combining equity financing and debt financing can have powerful results for your client’s ability to grow and support their scaling with funding that grows with them. When you’re ready to discover strategic hybrid options to help your SaaS clients scale, turn to our team. 

Enjoy Better Financing Options with River SaaS Capital 

At River SaaS Capital, we strive to serve as a reliable, single-source funding partner equipped to support your clients with tailored solutions that address their changing needs. 

We begin our engagements with flexible venture debt financing that can be put into action fast to fuel growth. By taking the time to explore your client’s company and challenges, we can assess how we’re able to deliver the most support for their unique growth goals. This allows us to align with them and deliver the most value, and we offer an array of resources to do so, from GtM strategy to strategic growth insight from our expert team. 

Down the road, we can expand our relationship with your clients to include equity funding as well. This allows your clients to streamline the intense and difficult process of obtaining equity deals and ensures all the funding your client requires comes from one reliable source. As the funding and growth needs of your client shift, we’re equipped to address them with flexible equity financing and debt financing that can better support their scaling than equity alone. 

Explore the powerful relationship between equity and debt financing in our free guide. To power the swift, steady scaling of your clients, contact us today to explore our hybrid financing options.