How Tokenization Could Unlock a New Era for Funders and Syndicators Alike

Revenue-based financing (RBF) has emerged as a significant alternative capital market. Major players like PayPal and Amazon have deployed substantial funds to support small businesses. For example, PayPal has funded over $30 billion globally, issuing more than 1.4 million loans to over 420,000 merchants as of March 2025. On the other hand, Amazon offers its own RBF solutions, contributing significantly to this rapidly growing market.

The Growth of Revenue-Based Financing

Despite its growth, the RBF space remains fragmented. It lacks the institutional infrastructure found in traditional lending markets. Funders often operate on a deal-by-deal basis, recycling capital manually. Syndication typically happens through informal channels such as emails or calls. This leads to inefficiencies and missed opportunities.

The Syndication Bottleneck

In traditional finance, syndicated loans involve multiple lenders pooling their resources to fund large loans, coordinated by a lead bank. This structure allows for risk-sharing and efficient capital deployment. However, the RBF sector often lacks such formal structures. Deals are frequently syndicated through informal networks, relying on personal relationships and manual processes. This approach can lead to delays and limited scalability. Additionally, it creates challenges in risk assessment.

The absence of standardized documentation and centralized platforms means that funders may miss lucrative opportunities. They often cannot mobilize capital quickly enough. The lack of transparency in deal terms and performance metrics can also deter potential syndicate members. As a result, liquidity is further constrained.

Capital Constraints and Infrastructure Gaps

Many RBF funders face capital ceilings. These ceilings limit their ability to scale. Unlike traditional lenders with access to vast capital markets, RBF providers may rely on limited pools of capital. They recycle funds as repayments are received. This model can hinder growth, especially when demand for financing outpaces the rate at which capital is replenished.

Additionally, the infrastructure supporting RBF transactions can be underdeveloped. Without robust platforms for deal origination, underwriting, and servicing, funders may struggle with operational inefficiencies. The lack of integrated systems can lead to errors, compliance issues, and increased operational costs. These factors further strain resources.

The Promise of Tokenization

Tokenization offers a compelling solution to these challenges. By representing receivables as digital tokens on a blockchain, tokenization can facilitate faster, more transparent, and efficient syndication. Tokens can be easily transferred, fractionalized, and traded on secondary markets. This enhances liquidity and enables funders to access a broader investor base.

Moreover, tokenization introduces standardized documentation and real-time performance tracking. This increases transparency and trust among participants. Smart contracts can automate key processes, such as payment distributions and compliance checks. This reduces operational burdens and mitigates risks.

The potential of tokenization in RBF is already being explored. For instance, EVIDENT and IDA Finance Hong Kong Limited have partnered to tokenize and distribute RBF investment products. Their aim is to enhance liquidity and accessibility in the market.

Building a More Liquid Future

Embracing tokenization could transform the RBF landscape. It addresses the current limitations in syndication practices, infrastructure, and capital access. By leveraging blockchain technology, funders can create more efficient, transparent, and scalable financing models.

As the RBF market continues to grow, projections estimate significant expansion in the coming years. Adopting innovative solutions like tokenization will be crucial for funders. By doing so, they can unlock new opportunities and better serve small businesses. This will contribute to a more dynamic and inclusive financial ecosystem.

Conclusion: The Future of Financing

In conclusion, tokenization represents a pivotal development in the realm of revenue-based financing. By streamlining operations and enhancing liquidity, it promises to reshape how funders and syndicators operate. Those who adopt this innovative approach will be best positioned to thrive in the evolving landscape of alternative finance.

Scott Goldman, CEO

Receivabull Inc.