What Type of Funding Does Your DTC Brand Really Need?

As a founder or finance lead at a DTC brand, you're likely faced with one recurring challenge: how to fund growth without compromising control, cash flow, or future flexibility.

And while there’s no one-size-fits-all answer, there is one universal principle:

Match the funding type to the nature and timeline of the investment.
💡 Use short-term capital for short-term needs, and long-term capital for long-term bets.

This distinction is where many fast-growing brands get stuck. Using expensive equity to buy inventory, or relying on short-term working capital to fund a multi-year expansion plan, can create unnecessary dilution or cash stress.

Let’s walk through the most common types of funding—and when they actually make sense—based on both your growth stage and the type of investment you’re making.

1. Bootstrapping + Friends & Family:
Early Validation (0–$500k Revenue)

Funding purpose:

• Prove product-market fit
• Launch first SKU
• Test basic marketing channels (Meta, Google, etc.)

Appropriate funding:

• Personal savings
• Friends & family capital
• Small grants (e.g., Shopify’s Build Black program)

Why it fits:
At this stage, investments are long-term (e.g., initial brand development) but capital access is limited. Friends and family are investing in you, not your balance sheet, and the payback horizon may be uncertain. Use equity here — but sparingly and with clear expectations.

Watch out:
Don’t overcomplicate cap tables early with poorly structured notes or unrealistic valuations. Keep it simple and documentation clean.

2. Working Capital & Revenue-Based Financing:
Inventory, Ads & Repeatable Growth ($500k–$5M Revenue)

Funding purpose:

• Fund inventory for 60–120 day turns
• Scale customer acquisition
• Bridge cash gaps from net terms or seasonal swings

Appropriate funding:

• Working capital loans
• Revenue-based financing

Why it fits:
These are short-term investments with short-term payback — like inventory cycles and ad spend that returns in days or weeks. Flexible, non-dilutive capital here means you’re not giving away ownership to fund expenses that repay quickly.

Watch out:
Don’t use this capital to fund product R&D or long-term fixed costs. If you stop growing, payback terms may get painful.

3. Equity Funding:
Scaling into New Channels or Markets ($3M–$20M Revenue)

Funding purpose:

• Hire senior team
• Enter retail / wholesale
• Build new product lines
• International expansion

Appropriate funding:

• Institutional equity (seed, Series A)
• Strategic investors
• Crowdfunding (where on-brand)

Why it fits:
You’re making long-term investments that don’t return in 6 months. Equity gives you the capital—and strategic support—to grow into a much bigger business. Equity is also patient: if CAC rises or a product line takes time to ramp, your investors are (ideally) aligned on the long game.

Watch out:
Equity is expensive. Don’t use it for ad spend, shipping costs, or a one-off PO. That’s a $500k problem you just gave away 5% of your company to solve.

4. Hybrid Models:
Blending Capital Types
($10M+ Revenue or Late Seed/Series A)

Funding purpose:

• Balance sheet optimization
• Smoothing seasonality
• Supporting growth without over-diluting

Appropriate funding:

• Mix of equity + working capital facility
• Asset-backed lending (e.g., tied to inventory or receivables)

Why it fits:
At this stage, you’re juggling both short- and long-term investments: media spend, retail buildout, new talent, and more. The smartest brands build a capital stack where short-term capital fuels fast ROI (e.g., paid social, Amazon), and long-term capital covers expansion or tech investments.

How to Think About Payback Periods

When in doubt, ask this:

🧮 How long will it take for this investment to pay back in full?

Then choose the funding to match:

Using this simple lens, you'll avoid mismatched financing that either costs you equity too early—or leaves you cash-strapped when long-term returns take time.

So, What’s Right for You?

Use this quick cheat sheet to sanity check your current capital plan:

Where does Wayflyer come in?

Wayflyer provides short-term financing (3-9 month time horizon) for inventory or ad spend. We offer a few options to best match your cash cycle:

• Wayflyer Cash Advance
  • What is it? Upfront capital in exchange for a percentage of future sales, paid off daily, weekly or every two weeks over a 3-9 month period.
  • What are the benefits?
    • You can get financing in as little as 24 hours
    • When sales slow, repayments decrease automatically
    • When sales increase, you pay off the advance faster
    • Open-ended length based on growth, sales performance and seasonality
    • Only one transparent fee, with no hidden costs
  • Who does it tend to suit best? Seasonal brands that want repayments to be responsive to sales patterns.
• Wayflyer Term loan
  • What is it? A lump sum of upfront capital that you repay in fixed, predictable amounts on a set schedule, over a 3-9 month period.
  • What are the benefits?
    • No collateral or personal guarantees needed
    • More flexibility and higher limits than other providers
    • You’ll know exactly when it will be paid off
    • Well-suited for time-boxed initiatives where you can forecast ROI
    • Only one transparent fee, with no hidden costs
  • Who does it tend to suit best? Growing brands that want a fixed repayment schedule to plan ahead.

And if you are more established, with over $5M ARR, you may qualify for Wayflyer Rolling Finance. It offers continuous access to our Cash Advance or Term Loan products over a 12 month contract for established brands.

What are the benefits?

• Higher limits and no hidden fees
• Apply once for a pre-approved credit limit valid for 12 months
• Draw funds as needed, up to a pre-approved credit limit
• Only pay for what you draw

Final Takeaway

Choosing capital isn’t just about how much you raise—it’s about how and why. The best operators treat financing as strategic, not reactive. They:

• Match funding type to investment term
• Use short-term capital for fast-turn needs
• Use long-term capital for growth bets
• Protect margins and ownership along the way

For DTC brands, revenue-based financing is often the most founder-aligned way to grow in the early and mid-stages. It’s fast, non-dilutive, and performance-driven — the opposite of waiting six weeks for a bank or giving up equity just to fund inventory.

Wayflyer was built for ecommerce. Whether you’re unlocking capital for your next ad push, freight container, or PO, our funding solutions are designed to match your cash cycle — and scale with you.

See how much you qualify for in minutes.