How Efficient Capital Labs is powering the AI space with non-dilutive funding
When New York-based AI video creator BIGVU began to scale, they required additional capital to fuel expansion, manage day-to-day operations, and plan for future investments. This led the company to turn to revenue-based financing provider Efficient Capital Labs (ECL) to reduce cashflow issues by bridging gaps in payment cycles. With ECL’s financing, BIGVU was able to reach breakeven, thus enabling greater reinvestment in growth. Similarly, Kommunicate, an AI-powered customer service automation platform for enterprises, secured financing in multiple currencies from ECL to invest in their growth.
Traditional venture funding often comes with significant equity dilution, limiting founders’ control over their vision. ECL is changing the game in AI financing by offering a model that preserves ownership while fuelling growth. The US-headquartered fintech startup provides non-dilutive capital to B2B SaaS companies and has powered over $100 million in financing to over 150 companies since 2022.
AI could contribute up to $15.7 trillion to the global economy in 2030, more than the current output of China and India combined. Venture capitalists put $97 billion into AI startups in the US last year, with the AI-focused deals representing an increasing share of all startup investment.
Catering to the unique needs of AI startups
AI companies often have higher infrastructure and product costs such as engineering resources and compute costs. For instance, an AI startup with a product in the market may need to invest significant capital in upgrades and new features to stay competitive and meet customer expectations. AI companies have seen a 25% increase in demand for product-related capital over the last 12 months as they scale to meet evolving market needs.
“ECL helps such startups access capital up to $2.5 million in short time frames (even within a week) without taking equity, [to] pay for complex or costly product upgrades,” ECL Co-founder and CEO Kaustav Das tells YourStory. “Around 30-40% of our current funding is to AI startups, up from around 10% in 2022,” he says.
With longer sales timeframes, AI companies also need to spend more money on customer acquisition. This means that they need to educate customers who may be hearing about a product for the first time, and need additional focus from an AI company’s sales team to convert and purchase. Once customers are acquired, AI startups have more predictable revenue and a better net margin than startups in other categories.
“Non-dilutive financing is an appropriate investment fit when used for AI startup customer acquisition costs, because it has a direct impact on growing recurring revenue,” Das says.
A holistic risk assessment approach
Unlike conventional financiers that evaluate businesses based on local operations, ECL evaluates a company’s total global revenue across all geographies to provide a holistic risk assessment. This allows ECL to offer a more comprehensive and accurate view of a company’s financial health, and make more attractive financing offers.
Speaking about specific tools to evaluate the potential and performance of AI startups, Das says ECL has built its own automated risk decision engine, which offers a 360-degree view of a global business. “Our platform includes global data integrations with accounting and billing platforms, as well as banking platforms in multiple countries. We’ve implemented AI-based document assessment and machine learning models for revenue and debt estimation, as well as real-time risk monitoring,” he shares.
The funding model
While AI development frequently requires substantial upfront investment before generating revenue, ECL doesn’t require a company to be profitable to qualify for funding. For example, a typical use case for non-dilutive financing is funding to reach breakeven. In this case, a company, which has a predictable cost of customer acquisition, can get funding upfront to invest in acquiring new customers. This helps the company scale monthly recurring revenue to a point where revenue matches or exceeds operational costs.
“We have many customers who are investing ECL funds towards accelerating product development. This enables [them] to speed up customer acquisition with a more fleshed-out product, bring more competitive products to market, and potentially charge more per customer based on a sophisticated feature-set,” Das says.
Eligibility
To be eligible for ECL’s funding, AI companies must have a recurring revenue business, with an entity in the US, India or Singapore, and at least $250,000 of annual recurring revenue. ECL offers funding in multiple currencies, including USD, INR, and SGD, enabling businesses to manage cash flows more effectively and reduce reliance on foreign exchange transactions.
Last year, the company secured $11 million in Series A funding to expand into Singapore and other Southeast Asia markets, building on the successful traction seen in the US and India.
