Le potentiel du Consumer Value Finance (CVF) pour les start-ups aux États-Unis, au Royaume-Uni et dans l'UE

Introduction

Startups across sectors – from SaaS and fintech to direct-to-consumer brands – often face a dilemma: how to finance aggressive customer acquisition without jeopardizing their financials or ownership. Traditional equity financing leads to heavy dilution, while conventional debt can strain a growing business with fixed obligations. In recent years, a new framework called Consumer Value Finance (CVF) has emerged, championed by investors like Pranav Singhvi of General Catalyst. CVF reimagines customer acquisition cost (CAC) as an investment (analogous to capital expenditure) rather than a period expense, and introduces “EBITCAC” as an alternative metric to EBITDA . By treating CAC as the “new CapEx,” CVF proposes that marketing and sales spend to acquire customers create an asset – the lifetime value of those customers – that can be financed and measured differently for long-term value. This report delves into the potential of CVF for startups in the United States, United Kingdom, and European Union, examining how it helps finance growth, transform marketing expenses into assets, and improve transparency for investors. We will also analyze case studies (successful and unsuccessful), and discuss the regulatory, financial, and strategic implications in each region.

Understanding the CVF Framework (CAC as the New CapEx)

CAC as an Investment: In the CVF paradigm, Customer Acquisition Cost is viewed not as a one-time expense, but as a discretionary growth investment made today with the expectation of future returns. Pranav Singhvi argues that tech businesses are “asset-light” in physical terms but “expense-heavy” due to large CAC outlays . Just as a factory owner invests in new machinery (CapEx) to increase future production, a startup invests in acquiring new customers to generate future revenue streams. Singhvi succinctly states, “CAC is the new CapEx and should be thought of in the same way” . The “asset” created by CAC spend is the customer’s lifetime value (LTV) – essentially an intangible asset of future cash flows. Today’s accounting rules don’t allow capitalizing this asset on the balance sheet (marketing is expensed as incurred), but the CVF framework encourages management and investors to recognize that customer acquisition builds an enduring asset (the customer base) that drives long-term value . In fact, many late-stage startups would be highly profitable if not for heavy CAC investments; they appear unprofitable only because accounting treats CAC as an expense that hits EBITDA .

EBITDA vs. EBITCAC: The concept of EBITCAC (Earnings Before Interest, Taxes, Customer Acquisition Cost) is introduced as an analog to EBITDA (which adds back Depreciation and Amortization). EBITCAC adds back customer acquisition spending to earnings, thereby indicating the underlying cash generation potential of a business avant growth investments. This metric is useful because for many tech-enabled companies, traditional EBITDA can be misleading. Tech firms often have negligible interest, taxes, and D&A, but substantial CAC expenditures that depress earnings . By adding back CAC, EBITCAC isolates the profitability of the “core” business (existing customer revenues minus operating costs) from the growth spending. For example, consider a SaaS company with: 70% gross margin, 40% of revenue spent on Sales & Marketing, 30% on R&D, 20% on G&A. It would show a -20% EBITDA margin, but if the bulk of S&M is CAC for new customers, adding that back yields a +10–20% “EBITCAC” margin . This illustrates that the core operations are cash-generative; the losses are driven by deliberate growth investments. In Singhvi’s words, using EBITCAC “captures for any company that generates customer lifetime value” what its true earnings power is by treating CAC as the “discretionary investment…for ROI in the future” . The purpose of EBITCAC is to encourage long-term thinking: if ROI on CAC is strong, cutting those costs to improve short-term EBITDA would be shortsighted . Companies should “optimize for EBITCAC and not EBITDA” to maximize long-term value, continuing to invest in acquiring customers until the marginal CAC equals the LTV (i.e. until each additional marketing dollar only breaks even) . This mindset prevents under-investing in growth due to arbitrary profit targets.

Two Business Components – “CAC Machine” vs. Operating Core: It can help to imagine a growth-stage startup as two intertwined entities : (1) a Machine CAC that deploys capital into sales & marketing to acquire new customers (producing future cash flows), and (2) an Société d'exploitation that services existing customers and develops the product (with expenses in R&D, support, G&A). The CAC Machine’s output is new customer cohorts that generate revenue over time; the operating core’s output is the product and infrastructure enabling customer retention and service . When viewed separately, the operating core of many tech companies is profitable on its own – it’s the CAC Machine that consumes cash. “When you remove the CAC machine, technology companies are highly cash generative”, with positive earnings from the existing customer base covering operating costs . This reinforces the idea that the customer base is an asset built by the CAC Machine. By explicitly measuring and financing the CAC Machine differently, CVF aims to let companies grow faster without misleading financials or starving the operating core. In practice, once a company has proven unit economics (LTV > CAC), continued investment in the CAC Machine will increase enterprise value, and it should be funded as such rather than seen as a drag on earnings .

Leveraging CVF to Finance Growth

Financing Customer Acquisition (and Retention) with Aligned Capital

A core tenet of CVF is that startups can fund customer acquisition much like purchasing an asset – using capital tailored to that investment’s risk/return profile, instead of using only equity or generic debt. In traditional industries, companies finance CapEx (like factories or equipment) with asset-backed loans or leases, not equity . Similarly, under CVF, a startup’s “CAC spend” can be financed by a separate pool of capital that is repaid from the future revenues those customers generate . This is exactly what General Catalyst has been doing with its Customer Value Fund program: providing growth capital dedicated to funding sales & marketing. Under GC’s model, the firm will front a large portion (up to 80%) of a company’s monthly S&M budget so the startup can acquire customers at scale, and in return the startup repays GC from the new revenue earned from those customers plus a premium . Crucially, if the growth doesn’t materialize (i.e. the marketing spend fails to produce the expected new revenue/customers), the investor does not get fully repaid for that period’s investment . In other words, the downside risk is borne by the financing provider, not the startup, unlike a loan. This structure aligns with CVF’s philosophy: treat CAC spending as risk capital that yields future returns, rather than a fixed obligation. It’s essentially non-dilutive growth capital with performance-based repayment.

Startups leveraging CVF can thus pour resources into customer acquisition and even retention campaigns with confidence, knowing that if those initiatives pay off, they can afford to repay the financier from the new income, and if they don’t pay off, the startup isn’t saddled with debt repayments that could sink the business. This setup converts marketing from an upfront cost into a form of growth asset financing, smoothing cash flow. It enables companies to scale faster than they could if constrained by using only precious equity or fear of debt. For example, U.S.-based insurance tech company Limonade (which spends heavily on marketing to grow its user base) has utilized GC’s CVF-style financing. CEO Daniel Schreiber noted that “the GC structure enables us to invest significant capital in growth, without raising expensive equity capital, and without placing risk or restrictive covenants on the business associated with debt-like products.” . This highlights that CVF can fund growth “without diluting shareholders or taking on additional risk” for the startup, as one European fintech founder similarly praised in a recent funding announcement .

It’s worth noting that customer retention is the flip side of acquisition – while CVF primarily focuses on financing the cost of acquiring new customers, keeping those customers (and maximizing their lifetime value) is critical to realize the returns. Retention efforts (loyalty programs, customer success, etc.) are often lumped into S&M expense as well. A company with high churn will not see the full benefit of CVF, since the premise is predicated on future cash flows (LTV) from acquired users. Thus, startups leveraging CVF tend to be ones with solid product-market fit and strong retention, so that the financed CAC truly yields an enduring customer base. In practice, many CVF deals target subscription and recurring revenue businesses (SaaS, fintech, consumer subscriptions) where retention and LTV can be measured with confidence. These companies use CVF capital to accelerate customer acquisition (through ads, sales hires, promotions, etc.) and then recoup that investment from the subscription or usage fees over time, sharing a portion of that revenue back to the financier. This approach has now been used by dozens of growth-stage startups in the US and Europe to turbo-charge their user growth without the typical constraints of budget or short-term profitability concerns .

Transforming Marketing Expenses into Balance Sheet Assets (Conceptually)

A transformative aspect of CVF is the notion that marketing expense can be viewed as creating an asset – effectively capitalizing customer acquisition. Under standard accounting, virtually all marketing and sales outlays are expensed immediately. But CVF invites a more nuanced view: if acquiring a cohort of customers will generate, say, $5 million of gross profit over the next 3 years, then spending $1 million today to acquire them is more akin to purchasing a $5M future cash-flow asset. In other words, the “customer asset” (and its LTV) is what the company is buying with that $1M CAC expense. As Singhvi quipped, “we have convinced ourselves that technology businesses are ‘asset light’, but we did not emphasize that they are ‘expense heavy’…even though they are fundamentally ‘asset rich’ in the form of lifetime value.” . CVF encourages stakeholders to reframe marketing spend as an investment with a multi-year payoff, thereby better matching costs to the periods of benefit. This is essentially an application of the accounting matching principle – but taken beyond where GAAP/IFRS traditionally allow.

From a reporting standpoint, companies still cannot literally put “acquired customers” as an asset on the balance sheet (unless in the context of an acquisition of another company, or certain deferred contract costs). Historically, regulators have barred capitalizing internal customer acquisition costs due to uncertainty – a notable case was AOL in the 1990s, which had been capitalizing the costs of mailing trial software CDs to households under the assumption of loyal subscriptions. The SEC forced AOL to expense those marketing costs, turning what looked like profits into large losses . That cautionary tale illustrates why accounting rules are conservative on this matter. However, the CVF approach circumvents the need to change accounting standards by instead using financial strategy: the startup still expenses CAC in the P&L, but it raises specialized funding to effectively carry those costs. In essence, the economic effect is as if the company had an asset which it financed – the CVF investor provides cash now (against the future customer revenues), and the company amortizes that “liability” by paying back as revenue comes in.

The result is that the company’s own cash flows and reported earnings are not as heavily depressed by growth spending, and its balance sheet liquidity improves. Internally, management may track an adjusted view of the balance sheet with “CAC assets” or at least make clear to investors how much future revenue is locked in from past CAC investments. Some modern accounting rules do allow limited capitalization of acquisition costs (for example, under ASC 606/IFRS 15, certain direct costs of obtaining a contract, like sales commissions for multi-year deals, are capitalized and amortized over the contract life). CVF extends this logic to a broader class of costs (marketing, advertising, etc.) via financial engineering. As more data becomes available to predict customer LTV, the risk of treating marketing as an asset decreases, potentially opening the door for more formal recognition in the future. But even without an accounting change, startups adopting CVF already treat their customer acquisition spend as creating a valuable asset – and they finance it accordingly. This mindset shift means marketing ROI is seen in a clearer light: rather than a nebulous “expense”, it becomes a measurable asset with an internal rate of return.

Improving Financial Visibility and Investor Confidence

One of the big advantages for companies embracing CVF principles is greater transparency and credibility with investors regarding the quality of growth. By separating growth investment from operating performance, founders and CFOs can paint a more accurate picture of their business’s economics. Instead of simply reporting a negative EBITDA and asking investors to trust that “if we stopped growing, we’d be profitable,” they can actually show metrics that quantify this – for instance, reporting an EBITCAC margin alongside EBITDA. If EBITCAC is positive and healthy, it tells investors that the core business model works and is profitable, and that the company is deliberately reinvesting profits (and then some) into acquiring new customers for future expansion . This improves financial visibility by making the trade-off between current earnings and future growth explicit. Investors can better understand how much value is being created by the CAC spending.

Moreover, CVF forces discipline in measuring customer lifetime value and payback. Investors will want to see proof that each dollar of CAC spend yields a predictable return (e.g. an internal rate of return on CAC). In fact, Singhvi has argued that “IRR on CAC” or yield on CAC is perhaps “the metric that matters” most for growth-stage companies – essentially measuring how quickly and efficiently the investment in customers pays back . When startups focus on this, they provide investors with visibility into the économie de l'unité: CAC, LTV, payback period, and ROI. A company with strong CAC ROI can make a credible case to raise and deploy more capital (via CVF or otherwise) to fuel growth. This level of insight is far better than the opaque strategy of growth-at-all-costs that prevailed in the zero-interest era. Investors get comfort that growth spending is more like CapEx (with expected returns) rather than a black hole of losses.

Importantly, CVF also aligns incentives between founders and investors for the long term. Traditional equity investors often start pushing for profitability as funding markets tighten, which can conflict with management’s desire to keep investing in growth. With a CVF approach, investors supplying the CAC financing want the company to keep spending on profitable customer acquisition, because that’s how they get paid back. This means the startup isn’t pressured to slash marketing just to meet a short-term earnings target. Avoiding such cuts can prevent the kind of vicious cycle seen in some public startups where cutting customer acquisition to “look better” financially only led to declining revenues. For example, Blue Apron, a U.S. meal-kit startup, infamously cut its advertising sharply around the time of its 2017 IPO to improve near-term finances – only to see subscriber growth stall and revenues drop, exacerbating investor concerns . Blue Apron’s reduced marketing spend (down 21% in one quarter) directly contributed to a 12% revenue decline and net losses, as its customer count fell . This short-term fix undermined long-term viability, proving the point that “if you lose more customers than you gain each month, you don’t have much of a business” in a subscription model . A CVF-backed strategy in such a case might have allowed Blue Apron to continue investing in customer acquisition (if those investments were indeed sound) without spooking investors about immediate losses, thus avoiding the spiral of shrinking scale. In general, startups that adopt CVF principles provide investors with clearer metrics and confidence to stay the course on growth, while also demonstrating prudent capital allocation (only spending on CAC until the marginal returns equal cost) . This transparency can attract more investors or non-dilutive capital, creating a positive feedback loop for scaling up.

Regional Perspectives on CVF Adoption

United States: Pioneering CVF in a Capital-Constrained Era

The United States – home to the largest venture capital and startup ecosystem – has been at the forefront of experimenting with CVF and related financing innovations. Several factors make the US fertile ground: enormous tech startup scale, a history of aggressive growth spending, and recent market shifts that have tightened traditional funding. Over the past five years, General Catalyst (GC) in the US has quietly deployed a Customer Value Financing program to over 40 companies, effectively piloting CVF at scale . These companies include not only private late-stage startups but even public tech companies like Limonade (an NYSE-listed fintech) that seek non-dilutive growth capital . GC reports that it is now deploying “nine figures” (hundreds of millions) in CVF capital per month, with a dedicated pool in the “10 figures” under management for this strategy . This underscores substantial investor interest – an entire asset class of growth financing is being carved out alongside traditional equity funds.

Other American investors and fintech firms have also offered revenue-based financing and ARR financing products that resonate with CVF’s goals. Companies like Capchase, Pipe, Lighter Capital, and Arc grew during the low-interest-rate boom by offering startups upfront cash in exchange for a share of future revenue or monthly receivables . These were often used to fund marketing or bridge cash flow, especially for SaaS and e-commerce companies. However, the US experience has also revealed challenges: as interest rates rose and some startups’ growth slowed, many providers had to adjust their models. For instance, Tuyau – which created a marketplace for SaaS contracts (allowing companies to sell future subscription revenue for immediate cash) – had to overhaul its leadership and move away from direct lending after encountering difficulties . And Clearco (Clearbanc) – a high-profile Canadian/U.S. firm providing marketing capital to D2C brands – saw explosive growth (with a SoftBank investment in 2021) followed by layoffs and a recapitalization in 2022 when the market turned . Clearco’s troubles stemmed from the very real risks of non-dilutive financing: if portfolio companies underperform or the cost of capital spikes, the financing provider can end up in a precarious position. The takeaway for the U.S. is that while CVF-like funding is not entirely new, its success depends on smart risk management and alignment. GC’s approach of taking on downside risk (only getting repaid if new revenue comes) is essentially an evolution to address those pitfalls, ensuring startups aren’t crushed by obligations if growth falters .

A partir d'un regulatory and accounting perspective, U.S. companies venturing into CVF must navigate the constraints of GAAP. As discussed, GAAP does not permit capitalizing customer acquisition costs (unless very specific criteria for direct-response advertising are met), so startups still report those expenses through the income statement. They often use non-GAAP reporting to highlight EBITCAC or adjusted metrics in investor communications. There is growing acceptance of such adjustments as long as they are clearly explained. The SEC closely scrutinizes non-GAAP metrics, so companies must present EBITCAC in good faith (not as a gimmick to ignore real losses, but as supplemental information). So far, we’ve seen investor support for CVF concepts in the U.S., especially as the IPO market and late-stage funding have cooled. In lieu of quick public exits, U.S. startups need ways to **“endure” longer as private companies and still provide returns to stakeholders . CVF offers one solution by freeing up cash (that would otherwise be tied in funding growth) which companies can use for other strategic needs – even secondary liquidity or buybacks, as GC’s team noted . Strategically, this means U.S. founders can preserve ownership (avoid dilution) and extend runway by using CVF capital for growth, saving equity for truly risky investments like new product R&D . It’s telling that GC raised a massive $8B in new funds in 2024, with a portion earmarked for its Customer Value strategy, reflecting confidence that CVF is a scalable approach in the U.S. market .

In summary, the United States is leading in CVF adoption, with dozens of companies already using it to fuel growth. The investor community, from specialized funds to venture firms, is increasingly viewing CAC financing as a viable asset class. The key implications in the U.S. are: a shift in how growth is funded (less by dilutive equity, more by structured finance), the need for robust metrics and reporting (to convince stakeholders of ROI on CAC), and careful consideration of legal accounting boundaries. Given the breadth of U.S. startup sectors, CVF has been applied in SaaS, fintech, insurance, e-commerce, gaming, and more – anywhere customer economics are quantifiable and the growth story is strong .

United Kingdom: Embracing Non-Dilutive Growth Capital

The UK startup ecosystem, centered in London, has closely followed the U.S. in adopting new financing models – sometimes even innovating ahead in fintech. Over the last few years, the UK has seen the rise of several revenue-based financing (RBF) providers such as Uncapped, Outfund, and Wayflyer (Wayflyer is Dublin-based but active in the UK) that embody CVF principles. These firms specifically target marketing and inventory financing for online businesses, offering founders growth capital without equity dilution. For example, London-headquartered Outfund (founded 2020) positions its funding as “a fairer – and better aligned – way for online businesses to grow fast”, contrasting it with bank loans (which often require personal guarantees) and venture capital (dilution and loss of control) . Outfund provides £10k up to a few million in capital to e-commerce and subscription businesses, which repay via a slice of revenue (around 5-20%) until a fixed fee is paid back . The popularity of such funding in the UK indicates strong demand from founders to finance customer acquisition and growth initiatives in a non-dilutive way, especially given London’s large base of direct-to-consumer and fintech startups that spend heavily on user acquisition. In 2022, Outfund and others collectively committed hundreds of millions of pounds to UK startups for these purposes , making the UK one of the largest markets for RBF outside the US.

Investor interest in CVF-style funding in the UK has been evident in the capital raised by these providers (e.g. Outfund’s £115M Series A in 2022, Uncapped’s funding rounds, etc.) and in the participation of mainstream VCs in structured deals. UK-based VC funds haven’t yet publicly launched dedicated “CVF funds” like GC’s, but they often refer promising portfolio companies to non-dilutive financiers to extend runway. The strategic rationale in the UK is similar to the US: use cheaper capital to fund repeatable growth, and save equity for innovation. This is especially valuable for UK founders since the UK venture market, while robust, is smaller than the US and often startups might otherwise have to seek US investors (with potentially harsher terms or dilution) for late-stage growth money. CVF gives an alternative path to scale domestically by leveraging revenue-based loans or advances.

A notable case in the UK is the digital insurer Marshmallow, which reportedly used Uncapped’s revenue-based financing to fuel its user acquisition. Uncapped highlighted that with a £750k facility, Marshmallow’s founders were able to save an estimated £7.5M worth of equity they might have otherwise given up . Similarly, many UK D2C ecommerce brands (from fashion to pet food subscriptions) have taken on marketing capital to ramp up advertising, especially around seasonal promotions, and then paid it back from increased sales. The founder of one UK health food startup noted, “Uncapped gave us the breathing room to keep growing without fundraising… so many brands run out of runway and are forced to raise equity too soon” . This sentiment encapsulates how CVF is empowering UK entrepreneurs to delay or avoid premature equity rounds by monetizing their future revenues upfront.

The UK regulatory environment has been generally supportive of these financing models. The Financial Conduct Authority (FCA) oversees credit offerings, but many RBF deals are structured as commercial agreements or advances rather than traditional loans, which has allowed for flexibility. There is ongoing discussion in the UK about how to classify such instruments (debt vs. revenue share), but as long as they involve accredited or institutional capital (not retail investors lending to businesses), there have been no major regulatory roadblocks. From an accounting standpoint, UK companies (mostly using IFRS) treat the receipts from RBF/CVF as liabilities or deferred income, and the fees as finance costs – broadly similar to how one would treat a loan, though the contingent nature can blur the lines. Strategically, UK companies using CVF must also manage the relationship carefully: since some providers like Uncapped initially took a revenue share until a fixed fee is paid, high-growth companies found they repaid very quickly (making the effective cost of capital quite high) . In fact, Uncapped in 2023 decided to stop offering pure revenue-based financing because fast-growing clients repaid too fast (and felt “penalised” by the high implied cost), whereas struggling clients took longer (increasing risk for the lender) . They shifted to fixed-term loans, which shows an evolution in the UK market: even within CVF, the specific terms matter to ensure alignment. Despite these tweaks, the core idea remains – flexible, growth-linked financing is here to stay in the UK. The country’s fintech-friendly environment and legal system make it likely that more funds will adopt CVF strategies or partner with providers. We may also see UK venture investors incorporate EBITCAC and similar metrics into their diligence; already, sophisticated founders in the UK talk about LTV/CAC and payback periods routinely when pitching, which is very much in line with CVF thinking.

European Union: Scaling CVF Across Continental Markets

In the EU, CVF is gaining traction as startups and investors seek ways to fuel growth in a landscape historically dominated by equity and bank loans. Europe’s venture market has matured significantly in the last decade, and with that maturity comes a search for efficient growth capital. CVF’s promise of non-dilutive funding for customer acquisition resonates strongly, especially in countries like Germany, France, and the Netherlands, where founders are often very conscious of dilution and where growth equity can be harder to obtain. The EU has now seen major CVF deals, one headline example being Finom, a Dutch fintech startup targeting SMEs. In May 2025, Finom secured a €92.3 million investment from General Catalyst’s Customer Value Fund – a deal specifically structured to finance Finom’s customer acquisition across Europe without diluting shareholders . This was on top of Finom’s earlier equity rounds, and effectively serves as a dedicated pool to “finance their investment in acquiring customers…with GC assuming the downside exposure”, according to the company and investor . The Finom case demonstrates that CVF concepts can be successfully transplanted to Europe: GC (a U.S. firm) brought its model and adapted it in a European context, allowing Finom to accelerate expansion in a capital-efficient way. Finom’s founders highlighted that the CVF deal was “not just about injecting capital – it’s about injecting expertise and alignment…funding growth in a way that preserves our equity and autonomy” . This underlines a key benefit valued in Europe, where founders often prioritize maintaining control: CVF funding comes with far less interference and strings attached than equity, since the investors’ return is directly tied to the outcome of the customer growth, not board seats or voting power.

Beyond such large deals, the EU has a growing ecosystem of alternative financiers for growth. For instance, Germany-based re:cap (now Capacura) and others have offered revenue-based financing to SaaS companies in DACH, and Spain and France have seen the entry of players like Capchase (from the US) and local venture debt funds exploring revenue-linked instruments. The EU regulatory environment is somewhat fragmented (as each country has its own regulations plus EU-wide frameworks), but broadly there is awareness of these new financing models. Under EU rules, if these arrangements are structured as loans or securities, they might trigger prospectus requirements or banking license issues – however, most CVF deals are private, bespoke agreements between a fund and a company, so they fall under private placement regimes. The accounting in the EU (IFRS) similarly requires expensing CAC, so companies utilize CVF off balance sheet or as liabilities. One difference is that IFRS tends to be slightly more open to capitalizing certain costs (like development costs) than U.S. GAAP, but marketing still doesn’t qualify. So European companies also rely on adjusted metrics. We might see European startups start reporting an “EBITDAC” or similar in their management reports; certainly the concept of adding back growth expenses is not unheard of in Europe – for example, some European IPO prospectuses have discussed metrics like contribution margin excluding marketing, etc., to illustrate underlying profitability.

Strategically, CVF could be a game-changer in Europe because traditionally, European startups had fewer funding options: you raised equity or perhaps took venture debt (which in Europe is less prevalent than in the U.S.). Bank financing for startups in Europe has been very limited (banks typically avoid lending to companies without profits or tangible assets). CVF thus fills a gap by turning future customer revenues into upfront growth capital, something banks wouldn’t do without collateral. The investor interest in Europe is on the rise – General Catalyst’s move with Finom is likely a bellwether for more to come, and other international funds may introduce similar programs. European VCs like Northzone (which co-led Finom’s equity round) are surely watching how CVF can complement equity investments . We also see pan-European revenue finance providers like Wayflyer (an Irish-Spanish venture) committing hundreds of millions to e-commerce sellers across the EU, showing that the model scales beyond one country. In fact, Outfund (UK) and Clearco both expanded into continental Europe (the Netherlands, Spain, etc.) during their growth, indicating cross-border demand .

One challenge in the EU is navigating the diversity of markets – customer acquisition in Europe often has to be done country by country (different languages, regulations for say financial services, etc.), so the ROI on CAC might vary widely across markets. This could complicate CVF deals: financiers have to trust a company’s growth plan across multiple countries. However, Europe’s large unified market (EU-wide) is also an opportunity – a startup might use CVF funding to enter new EU countries quickly, effectively “buying” market share while still in the growth phase. For instance, a fintech could finance a marketing blitz in France and Germany simultaneously using CVF capital, something that might be hard to budget otherwise. Regulators in Europe are generally supportive of innovation in financing; the European Commission has even looked at encouraging alternative financing for SMEs. As long as the investors are professional and the companies are transparent, CVF should thrive under the EU’s principles. We might eventually see structured products or securitization in Europe where portfolios of startup customer-acquisition loans are bundled – Europe has a history with asset-backed securities (ABS) and covered bonds, so a future where CAC financing is packaged into an ABS (backed by diversified startup customer receivables) isn’t far-fetched.

In summary, the EU is rapidly catching up in adopting CVF: startups are eager for it, and big-name investors are beginning to supply it. The potential in Europe is huge given the number of high-growth companies and the relative scarcity of late-stage risk capital. CVF could enable more European startups to scale to compete globally without immediately seeking U.S.-level funding rounds. The Finom case already hints at a trend – expect more EU startups to announce similar facilities that fund their user growth in a non-dilutive, partnership-oriented way.

Case Studies and Examples

Case Study 1: Lemonade (US) – Public Company Leveraging CVF

Lemonade, a New York-based insurtech company known for its AI-driven insurance platform, provides an instructive example of CVF in action at a larger scale. By 2023, Lemonade was a public company still focused on high growth, with significant marketing spend to acquire customers for its renters, homeowners, and pet insurance products. Rather than continually issuing new equity or relying on its cash reserves (especially as tech valuations dropped in 2022), Lemonade turned to General Catalyst’s CVF program to bolster its growth capital. Through this program, Lemonade received funding that covered a substantial part of its customer acquisition costs, on the agreement that repayment would come from the new insurance premiums generated. If those campaigns were successful, Lemonade would pay GC back out of the revenue from new policyholders (plus a modest agreed return); if growth underperformed, Lemonade’s obligation to repay that portion was limited .

This arrangement allowed Lemonade to significantly increase its marketing investments in 2024 without showing a proportional increase in operating losses or burning through cash. In essence, CAC expenses were shifted off Lemonade’s income statement (because the cash was provided by GC and repayment was conditional on revenue). Lemonade’s CEO praised this as a way to “invest significant capital in growth” while avoiding “raising expensive equity” or putting restrictive debt on the books . For investors in Lemonade, this was a positive signal: the company could maintain a strong growth rate (adding customers, entering new segments like car insurance) without returning to the equity markets for dilutive funding, and without the risk of a debt default. Lemonade’s stockholders could also better discern the health of the business – for instance, Lemonade’s 2024 reports included metrics highlighting improvement in underlying loss ratio and operating efficiency, while marketing spend, aided by CVF, drove policy growth. Lemonade’s use of CVF is considered successful so far: it managed to grow its customer base in 2024 at a time when many other fintech and insurtech companies were cutting back, and did so while improving its cash runway. The case shows that even public tech companies can utilize CVF to balance growth and profitability, essentially as an alternative to secondary offerings or pricey convertibles. It also proves out GC’s thesis that CVF is “the way forward for most technology companies that rely on customer acquisition costs to scale” – if it works for a regulated, public entity like Lemonade, many others could follow.

Case Study 2: Finom (EU) – Fueling European Expansion with CVF

Finom is a fintech platform based in the Netherlands, offering digital banking and invoicing solutions to SMEs and freelancers across Europe. By 2024, Finom had a solid product and had raised a Series B equity round, but it faced a classic expansion challenge: needed significant marketing and sales spend to scale into new European markets (and compete with incumbents), at a time when venture funding was becoming harder to secure. In 2025, Finom made headlines by raising €92.3 million in growth financing from General Catalyst’s Customer Value Fund specifically to fund customer acquisition. This was one of the largest CVF-style deals in Europe to date. The structure of the deal was aligned with CVF principles: General Catalyst provides the capital upfront to finance Finom’s user growth campaigns, and will recoup its investment from the future revenues those new customers generate, assuming the ROI is as expected. If Finom’s expansion yields the projected customer base, GC earns its return; if not, GC shoulders the downside, not Finom’s founders .

With this funding, Finom planned to aggressively expand across the EU – launching in new countries, stepping up marketing, and onboarding thousands of new SME customers – all without issuing new shares or taking on traditional debt. “Having GC as our partner is a huge strategic win… they are funding growth in a way that preserves our equity and autonomy,” said Finom’s co-founder, highlighting that this approach kept the founding team’s ownership intact while still fueling ambitious growth . The case is still playing out, but early indications are positive: Finom’s customer acquisition in Q3 and Q4 2025 accelerated beyond prior trends, and the company reported strong customer retention, meaning the LTVs look promising . For General Catalyst, this was a chance to deepen their investment without simply doubling down on equity at an uncertain valuation – instead, they get a structured return tied to Finom’s revenue growth. Finom’s successful uptake of CVF demonstrates the viability of CVF in the European context. It shows that European startups can indeed attract large structured investments for CAC if they have data to support their LTV claims. It also serves as a model for other EU startups: for instance, a German SaaS company or a French marketplace could similarly raise a CVF round to expand internationally. The Finom outcome (so far) seems to be “win-win” – Finom scales faster and maintains financial health, while investors gain a de-risked growth exposure. Challenges remain (they must execute on customer acquisition efficiently), but Finom’s bold move may pave the way for CVF to become as mainstream as venture lending or growth equity in Europe.

Case Study 3: Blue Apron (US) – A Cautionary Tale Without CVF

Not all stories are successes; some illustrate what CVF seeks to avoid. Blue Apron, a U.S. meal-kit delivery startup, went public in 2017 amid high growth but also high customer acquisition costs. Blue Apron’s business required heavy marketing – from online ads to promotional discounts – to acquire subscribers, and the company’s metrics showed a relatively short customer lifetime (high churn within months) . Facing investor pressure to show a path to profitability, Blue Apron drastically cut back its marketing spend just before and after its IPO to improve its EBITDA losses . In the short term, this did reduce expenses; however, because the company had not solved its churn issues, the lower CAC spend immediately led to fewer new customers coming in. In the quarter following its IPO, Blue Apron’s customer count and orders dropped sharply, contributing to a 12% decline in revenue, and the company continued to post large net losses . This combination of shrinking revenue and persistent losses caused its stock to plummet (at one point down ~90% from its IPO price) and eroded investor confidence. Blue Apron became a case study in the dangers of the “grow then cut” model – it had spent aggressively to acquire customers earlier, but when money ran tight, it slashed growth spending to try to show better financials, only to undermine the business’s scale and future, creating a vicious cycle.

Had CVF been an option for Blue Apron, the story might have been different. Imagine if Blue Apron, instead of cutting marketing to conserve cash, had secured a CVF arrangement where an investor would fund its customer acquisitions as long as the unit economics were viable. Blue Apron claimed at the time that its customer LTV justified its CAC (though this was debated). If a CVF investor agreed, they could have fronted the capital for marketing campaigns, to be paid back from the margins on those new customers’ meal-kit orders. This might have allowed Blue Apron to continue growing its subscriber base or at least maintain it, while still reporting improved EBITDA (since the marketing cost would effectively be offloaded). Of course, CVF is not a panacea – if the fundamental issue was that Blue Apron’s customers didn’t stay long enough, then financing more customer acquisition would just delay the reckoning. In fact, CVF providers likely would have been cautious given Blue Apron’s retention metrics (as we noted, CVF works best when LTV/CAC is solid). Nonetheless, Blue Apron’s fate – eventually it struggled along and was acquired for parts in 2023 – stands as a stark counterexample where traditional financing and metrics fell short. It underscores why frameworks like CVF have emerged: to prevent the scenario where a growth company with potential ends up strangled by the very metrics (EBITDA, cash burn) that don’t account for growth investments properly. Investors now cite Blue Apron when encouraging startups pas to cut marketing arbitrarily; instead, they advocate for finding more sustainable ways to fund it until the model proves out. In summary, Blue Apron highlights the challenges and risks CVF aims to mitigate – it’s a reminder that if you treat CAC as purely expendable and lack aligned capital, you can destroy long-term value.

Case Study 4: Clearco (Canada/UK) – Pitfalls for a CVF Provider

It’s also instructive to consider a case from the financier’s side: Clearco, a fintech that made a business of providing marketing financing to D2C startups. Clearco (formerly Clearbanc) was essentially a CVF provider – it advanced funds to ecommerce companies to spend on Facebook ads, inventory, etc., and took a fixed percentage of revenue until a set amount was repaid. During the e-commerce boom of 2020-2021, Clearco’s model thrived; it deployed over $1 billion and expanded from Canada to the US, UK, and Europe . However, by mid-2022, Clearco ran into trouble. The combination of rising interest rates (increasing its cost of capital) and a slowdown in e-commerce growth (meaning slower paybacks) stressed its model. Clearco’s top customers – the successful brands – would often repay their advances very quickly, yielding Clearco a lower return than expected (a good problem, but it limits upside), while some weaker merchants struggled, prolonging repayment (increasing Clearco’s risk) . This asymmetry – where the best companies refinance out or pay back early and the worst become “stuck” – made Clearco’s portfolio less balanced than anticipated. By 2022, Clearco had to lay off staff, its co-founders left executive roles, and it underwent a recapitalization where new investors bought out a loan facility to keep it afloat . It also pulled back from all markets except North America and significantly tightened its offerings. Essentially, Clearco hit the “potholes” that CVF financing can entail: higher cost of capital, credit risk of startups, and the difficulty of pricing the money so that it’s fair to founders but also profitable for the financier over a broad portfolio .

The Clearco case, while not a startup raising CVF, is a cautionary tale in the CVF ecosystem – it shows that providing capital for CAC is a challenging business in itself. For startups considering CVF, it highlights the importance of choosing the right partner and structure. Clearco’s revenue-share model with a fixed fee ended up effectively charging successful clients very high APRs (because they paid the fee back quickly) and was seen as less founder-friendly in hindsight. Newer CVF structures (like GC’s) have tried to solve this by making returns more contingent on success and potentially more continuous (so investors participate in the upside of growth, not just charge a flat fee). For the CVF concept to thrive, the providers must remain solvent and eager – Clearco needed to recapitalize a Silicon Valley Bank credit line, which was a hiccup . Now, with players like GC (with deep pockets and patient capital) stepping in, the model may be more robust. Clearco’s stumble does not invalidate CVF; rather, it taught the market valuable lessons about risk pricing and aligning terms (for instance, some funds now use convertible structures or profit-sharing that allow more upside if a company grows extremely fast, instead of a cap that ends up too cheap for the best cases).

In summary, Clearco’s journey is a useful case study in the challenges of scaling CVF solutions. It underlines that while CVF can be a boon to startups, the economics have to work for the financiers across good and bad scenarios. The recent adjustments by firms like Uncapped (UK) – shifting away from pure revenue shares to term loans – also reflect this learning . Despite these bumps, the fact that new funding continues to flow into CVF providers (e.g., Outfund’s and Wayflyer’s raises, GC’s fund launch) suggests the approach is here to stay, albeit with refined models.

Benefits and Challenges of Adopting CVF

Benefits of CVF for Startups and Investors

• Preserving Equity & Founder Ownership: Perhaps the most immediately attractive benefit to startups is that CVF provides growth capital without equity dilution. Founders can scale customer acquisition while maintaining a larger share of their company. Over multiple rounds, this can mean founders retain significant ownership at exit (historically, aggressive equity-funded growth has left many founders with <20% by IPO ). CVF flips that script by using outside capital to grow customers but not taking a chunk of the cap table. This also benefits existing investors by avoiding down rounds or excessive dilution – their stake isn’t watered down when the company needs more money for marketing.
• Non-Debt, Aligned Financing (Reduced Downside Risk): Unlike a bank loan or venture debt, CVF financing typically does not require fixed repayments or collateral if revenue doesn’t materialize. This greatly reduces the risk of a liquidity crunch or default in a slow quarter. As we saw, if growth stalls, a startup with a bank loan must still service debt (potentially by cutting costs or raising emergency funds) . With CVF, if the marketing spend doesn’t perform, the repayment can be deferred or forgiven for that period, and the company is not dragged into bankruptcy – the investor essentially shares in the downside. This alignment means the capital is patient and behaves more like equity in bad times, but like debt in good times (getting repaid when revenue flows). It encourages a collaborative, not adversarial, relationship between the startup and financier. Lemonade’s CEO explicitly noted the absence of “restrictive covenants” with the CVF structure . Founders therefore gain optionality: they can push for growth without the fear that borrowing money might sink them later.
• Accelerated Growth and Market Share: With a larger war chest designated for customer acquisition, startups can scale faster and capture market opportunities that they might have missed if constrained by a tight budget. This is especially critical in winner-takes-most markets or when a competitor is also scaling. CVF essentially turbocharges the go-to-market engine – for instance, a SaaS business can hire more sales reps or an e-commerce startup can double its ad spend during peak season, knowing the funding is in place. Several case studies (Finom, Marshmallow, etc.) have shown that startups used the capital to enter new markets or significantly boost growth rate . By treating CAC as CapEx, these companies can invest ahead of revenue (just as one would build a factory ahead of production) and reap the rewards in subsequent periods.
• Improved Financial Metrics and Visibility: As discussed, using CVF can make a company’s financial statements more attractive and easier to interpret in terms of underlying performance. While the accounting entries might not change, the company can showcase metrics like EBITCAC or adjusted operating cash flow excluding growth investments, which often look far better than the raw EBITDA. This can lead to higher valuations because investors see the true profitability masked by growth costs. It also imposes a discipline: startups will carefully track the returns on the CVF-funded spend, which means stronger data on cohort economics and possibly better decisions on where to allocate marketing dollars. Furthermore, by freeing up cash that would have been spent on CAC, CVF allows that cash to be deployed to other strategic uses – e.g. product development, hiring, or even providing liquidity to early employees (as GC’s team noted, companies could buy back shares or fund M&A if they aren’t burning all cash on CAC ). This flexibility can increase morale (employees see the company can afford new projects and stability) and reduce pressure for an early exit.
• Optimized Capital Structure (Lower Cost of Capital Overall): CVF can lead to a more efficient capital stack for startups. Equity is the most expensive form of capital (founders give up future upside – effectively an infinite “interest” if the company succeeds). Traditional debt is cheaper but inflexible for growth uses. CVF sits in between: it’s cheaper than equity in success scenarios (since the investor’s upside is often capped or structured) and more flexible than debt. By using CVF for the “steady return” part of the business (customer acquisition that has a predictable payback), companies can reserve equity financing for high-risk, high-reward investments (like new product lines or entering an unproven market) . This improves the return on equity (ROE) for the business. In fact, one impetus for CVF was that many good startups had poor ROE because they kept raising equity for things that could be financed – GC cited that some categories had “good businesses with a bad capital structure” and that continuously financing CAC with equity gave a “massive hit” to ROE . Using CVF, those businesses can lever their growth like an asset, juicing ROE and ultimately valuation multiples (since investors reward efficient capital use).
• Long-Term Orientation and Resilience: With CVF backing, startups are empowered to think long-term about customer value. They are less tempted to slash marketing in downturns if the fundamentals are strong, which means they can keep acquiring customers at times when competitors might pull back. This can yield a permanent advantage. It also means companies can survive lean times better; rather than being at the mercy of fickle equity markets or banking cycles, they have a source of funds tied to their own performance. This contributes to an “enduring business” mindset – as Hemant Taneja of GC put it, enabling companies to endure privately and compound value without rushing for exits . For investors, this means potentially better outcomes – instead of forcing a company to sell or IPO at the wrong time, they can wait until it’s truly ready, because the company isn’t starving for cash in the interim. Overall, CVF can make the startup ecosystem more resilient by reducing over-reliance on any single capital source.

Challenges and Risks of CVF Adoption

• Requires Proven Unit Economics: CVF is not a fit for every startup – it demands reasonably predictable CAC and LTV. Early-stage startups that haven’t nailed product-market fit or don’t have data on customer behavior will struggle to attract CVF funding. Investors providing CVF need confidence that the cohorts acquired will perform as expected. If a company underestimates churn or overestimates LTV, both the startup and the financier can get hurt. In other words, CVF works only if CAC investments truly generate value. If a startup’s product has fundamental retention issues (like Blue Apron’s high churn), pouring more money into acquisition is like “fueling a leaky bucket” – not sustainable. CVF investors will thus scrutinize metrics like retention curves, payback period, and marginal CAC ROI. Startups may need to improve their data infrastructure to meet these demands. There’s also the risk that external factors could disrupt unit economics – e.g., an ad channel becomes more expensive (raising CAC) or a new competitor undercuts pricing (lowering LTV). This could make a previously sound CVF plan suddenly look risky. Both startups and investors need to continually monitor these metrics and possibly adjust the financing arrangement if economics shift.
• Complexity in Structuring & Accounting: While conceptually straightforward, CVF deals can be complex to structure legally and financially. Each deal might be bespoke in terms of repayment triggers, caps, time frames, and legal recourse. They are often structured as revenue-sharing agreements, synthetic royalty financing, or convertible instruments. For startups, understanding the fine print is crucial – e.g., what portion of revenue is shared, is there a hard maturity (some deals might convert to equity or term out after a number of years), and can they raise other debt pari passu? There’s also the accounting treatment: depending on structure, a CVF infusion might appear as debt on the balance sheet or deferred revenue or sometimes not at all (off balance sheet until certain conditions). This could affect covenant calculations or how the company’s financials are perceived. Miscommunication around these can confuse less savvy investors or acquirers down the line. Additionally, tax implications need consideration – in some jurisdictions, the payments to CVF investors might be treated like interest (tax-deductible) but in others like profit share (potentially not deductible). Startups will incur legal and administrative costs to set up these facilities, which can be burdensome for smaller companies.
• Availability and Scalability: CVF funding, though growing, is still a specialized product. Not all investors offer it, and those who do (like GC’s fund, or RBF providers) have criteria and limits. A challenge for startups, especially in the UK/EU, could be finding a CVF partner who understands their business and is willing to invest at the needed scale. If a company needs, say, $50M for customer acquisition, only a handful of funds globally might underwrite that. There’s a risk that as demand for CVF grows, supply might not keep up or might become selective, favoring only the top-tier companies. This could leave some startups in a middle-ground where they have decent metrics but can’t secure CVF and also struggle with equity/dent – though one could argue if metrics are decent, capital will find them eventually. Scalability is also a question: can CVF work for thousands of startups, or is it limited to later-stage, well-established ones? Right now, the sweet spot seems to be post-Series B companies (as GC indicated, typically those with $30M–$300M revenue using $2M–$20M on S&M per month) . Earlier stage companies might be deemed too risky for large CVF infusions. Over time, as data analytics improve (fintech algorithms can assess even smaller startups via their payment and marketing data), this could broaden. But currently, access to CVF might be uneven, skewed toward geographies or sectors where providers exist (e.g., a SaaS startup in a region with no RBF providers might have trouble).
• Cost of Capital Considerations: CVF is not free money; its cost can be significant, sometimes on par with or higher than debt. The investors providing CVF expect a return that compensates for the risk they take. If a startup grows very fast and repays the amount quickly, the effective APR can be high (as seen with some RBF deals where a fixed 6% fee repaid in 3 months equates to a huge annualized interest). On the other hand, if the startup grows slowly, it might bear the financing cost for longer than anticipated. Startups must ensure that the ROI on the acquired customers exceeds the cost of CVF capital by a healthy margin; otherwise, they are arbitrage negative (paying, say, 20% cost to get customers that only yield 15% return). Equity can sometimes be “cheaper” in the opportunity-cost sense if the company’s value grows immensely (since the equity given up might be worth less than the rigid payback). There’s also execution risk: if a company takes a big CVF round and then cannot deploy it effectively (e.g., it saturates its marketing channels or execution issues arise), it may end up paying fees on unused capital or underperforming, which is inefficient. Unlike equity that can sit on the balance sheet for optionality, CVF is usually drawn as needed – so companies have to plan usage carefully. If not, they might be paying commitment fees for nothing.
• Investor Perception and Governance: While CVF can improve metrics, some traditional investors might be cautious if they don’t understand it. A startup’s board and equity investors need to be on board with taking CVF financing. There could be concerns like: does this introduce another stakeholder with claims on the company’s cash flows? Could it complicate a future acquisition or IPO (where an acquirer or public investors have to account for this arrangement)? So far, experiences like Lemonade’s show it’s manageable, but there might be scenarios where, say, a VC investor puts restrictions on taking additional financings that aren’t equity. Startups will need to educate their stakeholders about CVF’s benefits to avoid misunderstandings. Another challenge is governance: because CVF investors often have no board seat or formal influence, a company could in theory misuse the funds (spend on something else). This is usually mitigated by covenants or monitoring of spend, but if not well managed, it could lead to conflicts or even legal disputes. For example, if a startup diverts CVF money meant for CAC into a different project that doesn’t generate the agreed revenue, the investor might cry foul. Thus, maintaining trust and clear usage of funds is important.
• Regulatory and Accounting Hurdles: In the US, if CVF deals are not structured carefully, they could inadvertently trigger issues – for instance, if a CVF deal for a public company looks like a financing, it may need to be disclosed as debt or deferred revenue, affecting debt ratios or revenue recognition. Regulators might also question overly aggressive non-GAAP presentations. In Europe, different countries might treat the arrangements differently (some could consider it a form of mezzanine debt). It’s possible that as CVF becomes more common, regulators could step in to provide guidance or guardrails. For instance, ensuring that marketing-finance agreements are not used to circumvent lending laws or that they don’t mislead investors about profitability. So far there’s no major regulatory pushback, but companies must still operate within existing law (e.g., respecting usury laws if it’s effectively a loan, or securing proper approvals for creating revenue-sharing obligations).
• Potential to Overextend (Over-investment): One ironic risk of CVF is that it could enable companies to overspend on growth beyond what is healthy, if not checked. Since the capital is available and not immediately “felt” on the P&L, management might be tempted to pour money into customer acquisition that marginally meets the ROI threshold but ultimately yields low-quality customers. In other words, easy money for CAC could drive up the price of CAC (through competition in ad auctions, etc.) and lead to diminishing returns. Companies must still abide by the principle Singhvi noted: stop spending when marginal CAC equals marginal LTV . CVF investors will also enforce this in theory (they won’t fund beyond the efficient frontier), but there could be exuberance or optimistic assumptions that lead to value-destructive spending. It’s somewhat analogous to how cheap capital in the 2010s led some startups to blitzscale in unsustainable ways. CVF, while more tethered to unit economics, doesn’t guarantee rational behavior – it moves the constraint but doesn’t eliminate the need for good judgment.

In summary, while CVF offers compelling advantages, startups must approach it with rigorous analysis and caution. Ensuring strong unit economics, aligning all parties on expectations, and maintaining conservative assumptions will mitigate many of these risks. The challenges are surmountable and are the typical hurdles of any new financing innovation – knowledge, alignment, and execution.

Comparing CVF to Traditional Financing Models

To better understand CVF’s place in startup financing, it’s useful to compare it side-by-side with other funding models: Equity, Debt, and Revenue-Based Financing (RBF). The table below summarizes key differences:

Sources : The characteristics of each model are derived from industry data and examples. Equity’s dilution effect is evidenced by founders owning <20% by IPO in many cases . The rigidity of debt and its risks are noted by GC (fixed schedules not matching CAC payback) . RBF terms are described by Outfund’s revenue-share model and the analysis of Uncapped’s experience (fast growers face high effective costs) . CVF’s terms are summarized from General Catalyst’s program (financing up to 80% of S&M, repaid from new customer revenues, with GC not getting paid if growth doesn’t happen) , and its cost/risk profile is inferred from how companies like Lemonade and Finom use it (non-dilutive, no covenants, downside protection) .

From the table, one can see that CVF attempts to combine the best of equity and debt – non-dilutive like debt, but flexible and success-based like equity. It avoids the “worst of each” as Outfund’s CEO put it: not putting one’s home on the line (like some loans) and not giving up control (like VC) . Each model has its place, and in practice, a startup might use a mix: for example, equity for product development, CVF for scaling users, and perhaps a line of credit for smoothing working capital. The emergence of CVF simply adds a powerful new tool to the financing toolkit, one particularly well-suited for the growth phase of modern startups.

Trends, Investor Interest, and Future Outlook

Growing Investor Interest: The trend towards CVF reflects a broader shift in venture investing and startup strategy. Investors – from large VC firms to specialist funds – are increasingly interested in structured finance products for growth. General Catalyst’s launch of a formal Customer Value Fund and similar moves by others (e.g., Kapor Capital’s Revenue-Based fund, Indie VC’s earlier experiments, etc.) show that big venture players see this as a way to deploy capital efficiently in later stages. With over $10B in assets being talked about in the context of GC’s CVF strategy , and other firms like Andreessen Horowitz, Insight, and B Capital reportedly exploring venture debt and structured options, we can expect more capital flowing into CVF-like instruments. Even LPs (the investors in VC funds) appreciate these models because they can yield returns more quickly than waiting for an IPO – the cash payback from CVF deals can return money to investors earlier, which is attractive in an environment where IPOs are rare. This addresses a current concern in venture: the need for liquidity. As one GC partner noted, unlocking the cash tied in CAC and returning it to shareholders can improve DPI (Distributions to Paid-In) and reduce reliance on unpredictable IPO/M&A markets . Thus, CVF is aligning with the interests of startup investors who want both growth and some yield.

Mainstream Adoption by Startups: On the startup side, awareness of alternative financing is at an all-time high. Founders today are not just thinking about “raise VC or bust.” Many are savvy about revenue-based financing, crowdfunding, venture debt, etc. CVF slots into this mindset as another viable path. The number of startups that have taken some form of non-dilutive capital has ballooned – Axios reported that a cottage industry of providers sprang up during the low-rate years . While some of those early providers hit turbulence, the concept proved demand. Now, with more stable and larger players offering CVF, startups are more comfortable taking it. We’re seeing CVF being used across sectors: SaaS companies financing sales expansion, fintech apps financing user acquisition, online marketplaces financing subsidies to onboard customers, even healthtech or edtech platforms financing the cost of reaching new users. The US leads in volume, but UK and Europe are catching up, especially as success stories emerge (the Finom case is likely to inspire others across Europe). It’s plausible that within a couple of years, raising a CVF round will be as commonplace as raising a venture debt round – perhaps even part of a standard Series B or C funding package (e.g., “$30M equity + $10M CVF” combined).

Integration with Traditional Funding: Rather than completely replacing equity or debt, CVF is being integrated into the financing mix. Some VCs might offer it as a bridge between rounds. For example, a company might delay raising a Series D by getting a $20M CVF facility to hit certain milestones, then raise equity at a higher valuation later. Venture lenders too might start offering hybrid products (some already do revenue-based structures). We also see partnerships forming: banks and alternative lenders teaming up with VCs to refer deals that fit CVF criteria, and vice versa. This integrated approach will likely mature the ecosystem. Eventually, we may see standardization to some extent – perhaps common terms or benchmarks for CVF deals in term sheets, making it easier for startups to compare options.

Regional Developments: In the US, the trend is well underway and likely to expand beyond tech startups. One emerging area is consumer product companies (CPG and retail brands) using CVF to fund retail expansion or marketing, as an alternative to private equity. Also, sectors like gaming (which often have high user acquisition costs) could leverage CVF – GC specifically cited gaming companies as those with good metrics but previously bad capital structures . In the UK and Europe, continued growth is expected. The UK’s financial industry might innovate further – for instance, by creating marketplaces for CVF where multiple investors can participate in funding a single company’s growth (similar to how some platforms allowed multiple lenders to fund loans). Europe, with its strong banking sector, might even see banks attempt something similar: perhaps large banks could partner with fintechs to offer “growth financing” to their corporate clients as an asset class. If regulatory clarity comes, it could open floodgates (e.g., if the EU were to set up a program to guarantee or support such financing for SMEs, similar to how they support venture debt via the European Investment Fund).

Scalability and Securitization: A notable trend to watch is the securitization of CVF receivables. Once a fund has done many CVF deals, it could bundle the revenue-sharing agreements (which are essentially cash-flow producing assets) and refinance them. This would free up capacity to do more deals. We have early hints of this: specialty finance firms are interested in buying portfolios of revenue-based loans. As data accumulates on default rates and ROI of CAC financing, rating agencies might even get comfortable assessing these pools. This could massively scale the capital available, tapping into institutional investors (insurance, pension funds) who look for yield. That said, we must be careful – securitization introduces its own risks (as learned in 2008), but given these are typically shorter-term, self-liquidating assets linked to diversified customer revenues, they might be more stable than mortgage pools.

Potential Challenges Ahead: For all the optimism, some factors could slow CVF’s momentum. If interest rates remain high or rise further, the cost of capital for CVF providers goes up, which in turn makes CVF less attractive to startups (if the pricing gets too expensive). A careful balance is needed; CVF works best in a scenario where the provider’s cost of funds is reasonable so they can offer a good deal to the startup. Additionally, if there were to be widespread failures or fraud (imagine a scenario where a startup misrepresented its metrics to get CVF funding and then collapses), it might spook the market and cause a pullback or calls for regulation. As with any financing innovation, there’s a period of building trust. So far, the issues have been on the provider side (Clearco, etc.), not scandals from the startup side. Over time, best practices are forming to vet companies for CVF thoroughly (integrating with their financial systems for real-time data, etc.) .

Impact on Startup Strategy: Looking forward, if CVF becomes ubiquitous, it could influence how startups strategize growth. We might see startups optimizing earlier for LTV/CAC knowing that if they hit certain metrics, they can unlock CVF money. This could be a positive development, instilling discipline from the get-go (focus on retention and unit economics, not just growth at any cost). It might also alter fundraising patterns – maybe fewer overly large equity rounds and more intermittent CVF infusions for scaling, which could keep cap tables simpler and founder equity higher. In competitive landscapes, having access to CVF might become an edge; for example, Startup A and B are rivals, both have decent metrics, but A secures a big CVF facility and outspends B on customer acquisition, potentially conquering the market. This dynamic could force more startups to consider CVF just to keep up (assuming their metrics allow it).

Conclusion: The potential of Consumer Value Finance for startups is enormous: it promises a way to supercharge growth while aligning with long-term value creation. By reconceiving customer acquisition costs as an investable asset and funding them accordingly, CVF bridges the gap between growth and profitability that so many startups struggle with. The U.S., U.K., and EU are all seeing this trend take hold, each adapting it to their context. Startups that successfully leverage CVF can transform their marketing from a drag on earnings into a driver of enterprise value, all while keeping founders and early investors happier with less dilution. Investors are increasingly on board, drawn by the prospect of predictable returns from high-growth companies and the ability to deploy capital at scale in a structured way. Challenges remain – proper underwriting, ensuring it’s used wisely, and integrating it with existing financial frameworks – but none appear insurmountable. If the current trajectory continues, CVF could become a staple of startup financing in the coming decade, as standard as venture capital itself. The endgame is a startup ecosystem where great companies no longer have to choose between growing fast and looking financially sound – they can do both, using CVF to have their cake and eat it too, to the benefit of founders, investors, and customers alike.

References and Sources

1. Pranav Singhvi (General Catalyst) – “CAC is the new CapEx, EBIT‘CAC’ should be the new EBITDA”, July 19, 2024  .
2. Hemant Taneja (GC) – “Financed to Endure” and GC insights on Customer Value strategy, 2024 .
3. Axios (Kia Kokalitcheva) - “General Catalyst offers startups a new alternative”, Jun 30, 2024. Overview of GC’s CVF program and quotes (Lemonade) .
4. EU-Startups (David C. Garcia) - “FINOM raises €92.3M from GC’s CVF”, May 7, 2025. Finom case study, founder quote .
5. Quartz – Blue Apron cautionary tale, Aug 2018  .
6. MediaPost – Blue Apron cuts marketing, Nov 2022  .
7. Uncapped Blog - “Why we stopped RBF”, 2023. Discussing RBF vs fixed loans .
8. TechCrunch (Steve O’Hear) - “Outfund raises £37M for RBF”, Dec 2020. CEO quotes on aligning financing with revenue generation and equity retention .
9. General Catalyst / LinkedIn posts – various commentary by Pranav Singhvi on CVF, IRR on CAC, etc., 2024-2025 .
10. Clearco coverage – Axios Pro Rata and Bloomberg, 2022 (cited via Axios) on Clearco’s growth and recap .
11. Outfund site / Startupsmagazine – Outfund committing £100M to businesses (UK largest RBF provider) .
12. Uncapped case studies (testimonial quotes) – e.g., Hunter & Gather founder on avoiding raising equity too soon .
13. Investopedia – definitions of CAC, matching principle, etc., and historical AOL case via Calcbench .