SaaS companies can scale organically or inorganically, through product- or sales-led growth, mergers, or acquisitions. Deciding how to fund that growth is a strategic choice that can define your company’s long-term trajectory. Whether you rely on cash flow, raise equity, or take on debt, each path comes with its own trade-offs. The right financing approach depends on your company’s stage, size, profitability profile, and growth ambitions.
This article breaks down the core financing options available to SaaS companies, how to balance them effectively, and align your financing strategy with long-term goals. We also highlight the pros and cons of each approach, supported by real-world examples from our portfolio.
Anders Løe, Head of Investor Relations at Viking Growth
There is no one-size-fits-all solution to funding SaaS growth. The optimal financing strategy depends on your company’s maturity, capital requirements, risk tolerance, and strategic vision.
Broadly, SaaS companies rely on three primary sources of funding, often in combination, Internal cash flow, Equity financing and Debt financing
Each option carries distinct implications for ownership, control, dilution, and financial flexibility. Below, we outline the key characteristics, advantages, and considerations of each approach.
Once you’ve evaluated the different options, the next step is understanding what’s required to secure each type of financing.
In the early growth stages, typically before reaching €10M in annual recurring revenue (ARR), companies most often raise equity through minority or majority primary investments, as well as employee share schemes. At this point, profitability or a defined M&A strategy is usually not a requirement for raising capital.
As the company scales, additional equity can be raised by:
Both recaps and IPOs come with higher expectations around profitability, scale, and deal size:
As SaaS companies mature, debt can become an attractive complement or alternative to equity. The type of debt available depends on size, revenue predictability, and operating maturity.
Here are the most common debt instruments and when they tend to be used:
Secured loans with fixed repayment terms is best suited for companies with strong financials and predictable cash flow. Typically used for working capital or equipment financing.
Flexible lines of credit that can be drawn as needed, which is useful for short-term liquidity needs, especially for companies with recurring revenue and solid ARR visibility.
Non-bank lenders offering tailored financing solutions, including venture debt is ideal for growth-stage companies that may not yet qualify for traditional bank lending, but have strong forward-looking metrics.
Primarily relevant for later-stage or pre-IPO companies with substantial capital needs. Bonds provide access to capital markets but require robust financial transparency, compliance, and scale.
Pros:
• No dilution
• Retains full control
• Sustainable path
Cons:
• Limits speed of growth
• Slower scaling capacity
• Vulnerable to market fluctuations
Pros:
• Access to larger capital pools
• No repayment obligation
• Brings strategic partners onboard
Cons:
• Dilution of ownership
• Higher pressure for growth and returns
• Time-consuming fundraising cycles
Pros:
• No dilution
• Maintains ownership and control
• Often cheaper than equity long term
Cons:
• Requires repayment with interest
• Covenants may restrict flexibility
• Harder to obtain at early stages
To choose the right financing mix, founders should consider these key questions:
These questions help align your capital strategy with your company’s operating realities and growth ambitions.
In today’s environment, capital efficiency is more important than ever. Founders should consider how each financing option affects their burn rate and overall financial resilience. For a deeper dive into how investors evaluate burn multiple — and how to improve it — see our article on Burn Rate in SaaS: How to Calculate It and Why Investors Care.
As investors, we have supported our portfolio companies with a range of financing solutions tailored to specific objectives. These include funding acquisitions and expansions through bonds with Pareto, ABG Sundal Collier and Nordea, debt funds with Ture Invest and AshGrove Capital, and bank loans with Danske Bank and Nordea. Since 2020, we have raised over NOK 8 billion to help drive growth, support strategic initiatives, and create long-term value.
Choosing how to finance a B2B SaaS company is one of the most strategic decisions a founder will make. Reinvesting revenue offers control and sustainability; equity brings capital and strategic partners; and debt accelerates growth without dilution. The most effective approach is rarely a single path, most successful SaaS companies use a mix over time.
By understanding the requirements, trade-offs, and optimal timing for each type of financing, founders can build a capital strategy that fuels short-term momentum and supports value creation.
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