Recent years have been challenging for fintech startups seeking funding. Global fintech investment saw a sharp decline, with KPMG reporting that in H1 2025, funding reached only $44.7 billion across 2,216 deals, continuing the downward trend from previous years. This downward trend is also visible in Southeast Asia, where Tracxn notes a 66% drop in funding compared to H1 2024.
Fintech founders are also face rising operational challenges as well. Customer Acquisition Costs (CAC) have increased in a highly competitive market, while regulatory costs, including AML/KYC compliance and data protection requirements, place additional pressure on resources. At the same time, stricter due diligence processes force startups to demonstrate sustainable unit economics and carefully manage their burn rate before securing investment.
In response, many fintechs are now looking beyond traditional funding (like venture capital, angel investors, or incubators). They are exploring non-dilutive funding sources, such as revenue-based financing, venture debt, government grants, or hybrid structures, which help extend runway, reduce equity dilution, and optimize capital efficiency in a tighter funding environment.
In this article, we break down the main alternative funding options for fintech startups, how they work, and when to consider each one.
6 alternative funding options for fintechs (best for early & revenue-driven fintechs)
For a quick overview, the table below compares 6 top alternative funding options, with insights compiled from Forbes and Startup Grind.
| Funding type | Best for | Key benefits | Key considerations | Examples / providers |
|---|---|---|---|---|
| Revenue-based financing (RBF) | Subscription fintechs, revenue-generating apps | No equity dilution, flexible repayment | Requires consistent revenue | Clearco, Capchase |
| Venture debt | Fintechs with VC backing | Retain equity, extend runway | Interest + warrants, requires VC backing | Silicon Valley Bank, TriplePoint Capital |
| Crowdfunding | Lending, payments, personal finance apps | Engages community, diversifies capital | Slower for large sums, compliance needed | Seedrs, Kickstarter, Crowdcube |
| Grants & government funding | Early-stage, innovation-heavy fintechs | Non-dilutive, reduces pressure on runway | Competitive, reporting required | MAS Grant, FCA Sandbox, EU Digital Finance |
| Private credit / non-bank lenders | Lending fintechs, BNPL | Fast access, no equity dilution | Interest costs, eligibility criteria | Lendable, Credibly |
| Tokenized fundraising / STO / DeFi | Web3 fintechs, crypto-enabled services | Global investors, liquidity, flexible | Regulatory compliance, technical setup | Securitize, Polymath, Tokeny |
1. Revenue-based financing (RBF)
Revenue-Based Financing (RBF) enables fintechs to raise capital without diluting equity, repaying investors as a fixed percentage of revenue rather than fixed loan installments. It is particularly well-suited for subscription-driven or recurring revenue models, where cash flow predictability allows structured repayment that scales with actual performance.
Strategic impact: RBF optimizes runway by tying repayment to revenue, reducing pressure during slower months and allowing fintechs to invest aggressively in growth initiatives without giving up ownership. It also aligns investor incentives with company performance, as investors benefit only when revenue grows, fostering long-term partnership rather than short-term exit pressure.
Operational fit: Best for fintechs with high-margin recurring revenue, predictable churn, and stable unit economics. Companies with highly volatile or seasonal revenue may face cash flow risk if repayment percentages are fixed too high.
Financial considerations: Typical RBF deals range from $100K to $5M, with repayment caps and multiples often between 1.2× to 2.0× of the invested capital. This structure enables founders to manage burn rate efficiently, maintain equity, and avoid overleveraging early-stage operations.
When to use / avoid:
- Use if: You have consistent revenue, scalable customer base, and want to preserve equity for strategic investors.
- Avoid if: Revenue is highly unpredictable, or you need immediate large capital injections beyond what RBF providers typically offer.
2. Venture debt
Venture Debt combines loan financing with warrants, allowing fintechs to raise capital while maintaining majority ownership. It is most effective for startups with existing VC backing seeking to extend runway or fund growth initiatives.
Strategic impact: Provides additional liquidity without immediate equity dilution, supporting strategic expansion, working capital needs, or bridging to the next funding round. Maintains investor alignment without forcing early exits.
Operational fit: Suitable for fintechs with solid traction, predictable revenue, and active VC backing. Avoid if the company cannot service interest payments or manage warrants obligations.
Financial considerations: Typical deal sizes range from $500K to $10M, with interest rates and warrants negotiated based on risk profile and stage. Allows founders to extend runway and manage burn rate while retaining strategic control.
When to use / avoid:
- Use if: You have VC backing, predictable revenue, and need additional runway without equity loss.
- Avoid if: Cash flow cannot support scheduled interest or warrants, or VC support is absent.
3. Crowdfunding (equity & reward-based)
Crowdfunding allows fintechs to raise capital from a large pool of individual investors or backers, either via equity or rewards. Ideal for fintechs in lending, payments, or personal finance apps with strong community engagement.
Strategic impact: Builds brand advocacy and engages early users while diversifying the capital base. Can provide marketing momentum in addition to funding.
Operational fit: Best for fintechs with compelling stories and active communities. Avoid if targeting large capital quickly, as crowdfunding may be slower and compliance-intensive.
Financial considerations: Amounts vary widely; equity campaigns may require compliance filings. Ensure clear valuation and terms for investors.
Examples / Platforms: Seedrs, Kickstarter, Crowdcube
4. Grants & government funding
Grants and government programs provide non-dilutive capital that does not require repayment. They are ideal for early-stage, innovation-heavy fintechs, particularly those focused on regulatory compliance, digital finance innovation, or public impact.
Strategic impact: Reduces pressure on runway while supporting product development, compliance-heavy projects, and strategic initiatives with measurable impact.
Operational fit: Best for fintechs able to prepare detailed proposals, track milestones, and report outcomes. Avoid if speed of funding is critical, as grant cycles are competitive and time-consuming.
Financial considerations: Grant sizes typically range from $50K to $1M, depending on region and program. Funds can supplement runway or cover regulatory / compliance expenses without equity dilution.
When to use / avoid:
- Use if: You are early-stage, innovation-focused, and can commit resources to compliance and reporting.
- Avoid if: Immediate funding is needed or operational capacity is limited.
5. Private credit / non-bank lenders
Private credit or non-bank lenders provide debt financing, filling gaps left by reduced VC activity. Structured as loans, they deliver predictable capital without equity dilution.
Strategic impact: Supports growth, working capital, or market expansion with fast access to funds. Helps fintechs navigate funding gaps during market slowdowns.
Operational fit: Best for lending fintechs, BNPL providers, or high-volume transactional businesses. Avoid if debt service obligations exceed cash flow capacity.
Financial considerations: Loan sizes vary; interest rates depend on risk and creditworthiness. Offers predictable repayment schedules while preserving equity and strategic flexibility.
When to use / avoid:
- Use if: You need quick, predictable capital and want to avoid equity dilution.
- Avoid if: Cash flow is insufficient to service debt or capital needs exceed what non-bank lenders provide.
6. Tokenized fundraising / STO / DeFi capital
Tokenized fundraising, such as Security Token Offerings (STOs) and regulated DeFi liquidity pools, allows Web3 fintechs and crypto-enabled services to access a global investor base. Typically non-dilutive to traditional equity, but requires strong regulatory compliance.
Strategic impact: Unlocks global capital, programmable investment structures, and faster liquidity while supporting tokenized product strategies.
Operational fit: Suitable for fintechs with crypto-enabled products, tokenized services, or blockchain infrastructure. Avoid if regulatory readiness is low or investor education is required.
Financial considerations: Deal sizes and token economics vary; legal structuring and compliance are critical. Provides innovative financing options aligned with digital asset strategies.
When to use / avoid:
- Use if: You are a Web3 fintech with regulatory compliance and global investor access.
- Avoid if: Regulatory readiness is low or token economics are not clearly defined.
Case studies: real fintechs & their alternative funding strategies
To see how these funding options play out in the real world, let’s look at a few fintechs that leveraged them to fuel growth.
1. Wayflyer – scaling with non‑dilutive RBF
Wayflyer, a revenue‑based financing firm, has deployed over $5 billion in non-dilutive capital to more than 5,000 businesses globally. This model lets companies tap revenue-based financing to scale working capital without giving up ownership. Wayflyer’s approach shows how fintechs (or e‑commerce brands) can grow aggressively while preserving equity.
2. Brex: using venture debt to grow without sacrificing equity
Brex partnered with Barclays Investment Bank to raise $100 million in debt via a warehouse line of credit. This debt-backed financing helped Brex scale its corporate card business quickly without issuing new equity. By balancing equity funding and debt, Brex could expand while minimizing dilution and maintaining control.
3. Monzo: building user community through crowdfunding
Monzo raised £2.46 million on Crowdcube from more than 6,800 individual investors, making it one of the largest crowdfunding rounds for a UK fintech. Earlier, Monzo also raised £1 million in just 96 seconds through crowdfunding. Using crowdfunding allowed Monzo not only to raise capital, but also to build a loyal user community, turning early backers into active users and strong brand advocates.
What can Synodus help your Fintech business?
As a fintech solutions partner, we help startups turn their ideas into fully functional products. We provide strategic guidance on your funding ground, helping you identify the right funding models based on your stage, revenue, and growth goals.
Beyond funding advice, Synodus build and scale fintech products, from mobile apps to blockchain and data-driven solutions, ensuring your business can execute its vision efficiently. Our team also supports regulatory navigation, financial planning, and runway optimization, so your fintech is positioned for sustainable growth.
The result is a fintech that’s technically robust, strategically funded, and positioned to scale with confidence and control.
Reach out to us to see how we could support your fintech journey.
Conclusion
In conclusion, navigating the startup funding landscape can seem daunting. However, by understanding the various options available, you can equip yourself with the knowledge to make informed decisions. This comprehensive guide has unpacked the important information, pros, cons, and resources associated with each funding method.
Remember, the ideal path depends on your startup’s unique goals and circumstances. Conduct thorough research, leverage the provided resources, and craft a compelling pitch to connect with the right investors. With careful planning and strategic execution, you can secure the resources needed to propel your startup towards success.
