Equity Committed cash and credit Cost of capitalIllustrative, not to exact scale

The Arc of Financeability

Scaling today’s technologies consumes cash long before delivery and collection. To enable non-linear growth, the best companies of this decade will develop financing as a core competency by partnering proactively with lenders. This shifts financing from the factors of production to the units of production, where the units themselves serve as the underlying collateral. We call this shift the Arc of Financeability.

Read our full essay at futurefundamentals.com.

Worked example

Days to cash neutral for one unit of production

Takeaway

Contractual customer commitments make a unit of production financeable.

Financing frees equity to start production of the next unit.

The interactive chart below illustrates the economics for a hypothetical breakout startup deploying equipment for 90 days at a time to provide a service for a creditworthy customer.

BaselineUnfinanced$100 TCVCancellable on noticeNo financingCrawlInvoice factoring$100 TCV85% 30-day advance, 2% feeCancellable on noticeWalkLight financing$90 TCV (10% discount off list price)5% prepayment15% LTV at 15% interestTake-or-payRunStronger financing$90 TCV (10% discount off list price)20% prepayment50% LTV at 10% interestTake-or-pay

Operations

S0 Unfinanced

Product proven in pilots, now delivering its first commercial-grade unit to this customer under a signed contract

S1 Invoice factoring

Same stage as S0
Completed, invoiced work gives a factor something to buy, but not enough history to lend against

S2 Light financing

Several units delivered and accepted for this customer
A short performance record that supports a committed contract

S3 Stronger financing

An established operator with a multi-year record of on-time delivery and acceptance for this customer
This operating history earns a larger prepayment and more lender financing at the same 10% discount on price

Financing

S0 Unfinanced

The customer pays the full $100 price 30 days after the work is completed
The company funds a cash trough of $30 and does not get its equity back until day 120
This scenario generates the most cash at $70, but the company waits 150 days from signing for its first payment

S1 Invoice factoring

The contract matches S0, but the company sells the completion invoice to a factor for an upfront advance of 85% of its value
Most of the cash arrives 30 days earlier, and the factor charges a fee of $2
The cash trough remains $30 because the company can only factor work that has been completed and invoiced
The customer can terminate with one week's notice
A cancellation leaves the company with a cash loss of between $21 and $30, depending on when notice arrives

S2 Light financing

The customer receives a 10% discount in exchange for a committed contract and a 5% prepayment
A lender advances up to $13.50 against the contract at 15% interest
The cash trough falls from $30 in the unfinanced scenario to $13
Because the customer pays only after completion, the company does not get its equity back until day 120
The discount and $0.74 of interest reduce net cash flow to $59

S3 Stronger financing

The customer receives a 10% discount in exchange for a committed contract and a 20% prepayment
A lender advances up to $45 against the contract at 10% interest
The company does not have to contribute its own cash to the unit of production and can re-deploy the cash towards the next unit of production, 150 days earlier than if the first unit was not financed
The discount and $0.27 of interest reduce net cash flow to $60

Cumulative net cash flow for one unit of production ($)


Net cash flow	$70	$60
Discount vs. S0 (%)	—	10%
Net cash flow vs. S0 (%)	—	(15%)
Cash trough	($30)	$0
Cash neutral	Day 120	Always cash neutral or positive
Next unit can start production	Day 150	Day 0
Equity per unit of production	$30	$0
Units of production running concurrently on $1,000 of equity allocated to units of production (Day 0 Capacity)	33	Not limited by equity

Cumulative net cash flow = customer receipts + factoring proceeds + borrowing − spending − interest and principal paid. It excludes company equity, so negative balances measure company capital committed. Assumes a creditworthy customer and non-recourse debt, with no supplier backstops or parent guarantees. The S1 loss range assumes no payment for unfinished work and no equipment resale. Figures are on a cash basis (see the note under the five-year model).

Methodology

Negotiation and signing take 30 days and move no cash. Any prepayment is paid at signing (day -30)
Procurement and setup take 30 days and cost $20 (hardware, delivery, installation and integration), paid evenly across the period
Production goes live the day setup ends and runs 90 days. Operating costs are spread evenly: $6 of fixed recurring costs (for example site operators paid for a capped number of hours) and $4 of variable costs that swing with utilization or supply (for example raw materials during a shortage, or compute bought at spot prices above contracted capacity)
Unit costs total $30, a 70% S0 cash margin at the $100 list price. Setting the margin rescales all three cost lines
The customer is invoiced on completion (day 90) and pays 30 days later (day 120). A prepayment reduces the invoice
Each scenario's TCV is the list price less its discount: S0 $100, S1 $100, S2 $90 and S3 $90
S1 sells the completion invoice to a factor for an advance of 85%, 30 days before the customer pays. The fee is 2% of face value if the customer pays within 30 days, plus 0.6% for each additional 10 days or part (2% in this case)
Loan limits are a share (LTV) of each scenario's TCV: S2 15% at 15% and S3 50% at 10%. Simple interest accrues daily at the annual rate ÷ 365. Draws cover only that day's spending and interest. Principal is repaid in full at collection
S2 and S3 are take-or-pay. S0 and S1 can be cancelled on 7 days' notice, work stops when the notice period ends, and unfinished work is never invoiced or factored. The loss range covers notice on day 0 and on day 82, the last day notice can end the contract before completion
The chart follows one unit of production. For the next unit, each scenario holds the $30 of equity the unfinanced unit needs, and the next unit's procurement starts on the first day its cash needs fit within that equity alongside the first unit's
Cash neutral is the day after which cumulative net cash flow stays at or above zero. "Always cash neutral or positive" means the unit never uses company equity. It is financed, not recouped
Units running concurrently (Day 0 Capacity) is how many units $1,000 of equity allocated to units of production can carry at the same time (each holds its peak equity), rounded down. A scenario that needs no equity is not limited by the pool. At scale, the share of units the company finances bounds it, since unfinanced units always need equity
Taxes, customer default, residual value and liquidity buffers are excluded

Day	Customer receipts	Spending	Cumulative cash
-30	0.00	(0.67)	(0.67)
-29	0.00	(0.67)	(1.33)
-28	0.00	(0.67)	(2.00)
-27	0.00	(0.67)	(2.67)
-26	0.00	(0.67)	(3.33)
-25	0.00	(0.67)	(4.00)
-24	0.00	(0.67)	(4.67)
-23	0.00	(0.67)	(5.33)
-22	0.00	(0.67)	(6.00)
-21	0.00	(0.67)	(6.67)
-20	0.00	(0.67)	(7.33)
-19	0.00	(0.67)	(8.00)
-18	0.00	(0.67)	(8.67)
-17	0.00	(0.67)	(9.33)
-16	0.00	(0.67)	(10.00)
-15	0.00	(0.67)	(10.67)
-14	0.00	(0.67)	(11.33)
-13	0.00	(0.67)	(12.00)
-12	0.00	(0.67)	(12.67)
-11	0.00	(0.67)	(13.33)
-10	0.00	(0.67)	(14.00)
-9	0.00	(0.67)	(14.67)
-8	0.00	(0.67)	(15.33)
-7	0.00	(0.67)	(16.00)
-6	0.00	(0.67)	(16.67)
-5	0.00	(0.67)	(17.33)
-4	0.00	(0.67)	(18.00)
-3	0.00	(0.67)	(18.67)
-2	0.00	(0.67)	(19.33)
-1	0.00	(0.67)	(20.00)
0	0.00	(0.11)	(20.11)
1	0.00	(0.11)	(20.22)
2	0.00	(0.11)	(20.33)
3	0.00	(0.11)	(20.44)
4	0.00	(0.11)	(20.56)
5	0.00	(0.11)	(20.67)
6	0.00	(0.11)	(20.78)
7	0.00	(0.11)	(20.89)
8	0.00	(0.11)	(21.00)
9	0.00	(0.11)	(21.11)
10	0.00	(0.11)	(21.22)
11	0.00	(0.11)	(21.33)
12	0.00	(0.11)	(21.44)
13	0.00	(0.11)	(21.56)
14	0.00	(0.11)	(21.67)
15	0.00	(0.11)	(21.78)
16	0.00	(0.11)	(21.89)
17	0.00	(0.11)	(22.00)
18	0.00	(0.11)	(22.11)
19	0.00	(0.11)	(22.22)
20	0.00	(0.11)	(22.33)
21	0.00	(0.11)	(22.44)
22	0.00	(0.11)	(22.56)
23	0.00	(0.11)	(22.67)
24	0.00	(0.11)	(22.78)
25	0.00	(0.11)	(22.89)
26	0.00	(0.11)	(23.00)
27	0.00	(0.11)	(23.11)
28	0.00	(0.11)	(23.22)
29	0.00	(0.11)	(23.33)
30	0.00	(0.11)	(23.44)
31	0.00	(0.11)	(23.56)
32	0.00	(0.11)	(23.67)
33	0.00	(0.11)	(23.78)
34	0.00	(0.11)	(23.89)
35	0.00	(0.11)	(24.00)
36	0.00	(0.11)	(24.11)
37	0.00	(0.11)	(24.22)
38	0.00	(0.11)	(24.33)
39	0.00	(0.11)	(24.44)
40	0.00	(0.11)	(24.56)
41	0.00	(0.11)	(24.67)
42	0.00	(0.11)	(24.78)
43	0.00	(0.11)	(24.89)
44	0.00	(0.11)	(25.00)
45	0.00	(0.11)	(25.11)
46	0.00	(0.11)	(25.22)
47	0.00	(0.11)	(25.33)
48	0.00	(0.11)	(25.44)
49	0.00	(0.11)	(25.56)
50	0.00	(0.11)	(25.67)
51	0.00	(0.11)	(25.78)
52	0.00	(0.11)	(25.89)
53	0.00	(0.11)	(26.00)
54	0.00	(0.11)	(26.11)
55	0.00	(0.11)	(26.22)
56	0.00	(0.11)	(26.33)
57	0.00	(0.11)	(26.44)
58	0.00	(0.11)	(26.56)
59	0.00	(0.11)	(26.67)
60	0.00	(0.11)	(26.78)
61	0.00	(0.11)	(26.89)
62	0.00	(0.11)	(27.00)
63	0.00	(0.11)	(27.11)
64	0.00	(0.11)	(27.22)
65	0.00	(0.11)	(27.33)
66	0.00	(0.11)	(27.44)
67	0.00	(0.11)	(27.56)
68	0.00	(0.11)	(27.67)
69	0.00	(0.11)	(27.78)
70	0.00	(0.11)	(27.89)
71	0.00	(0.11)	(28.00)
72	0.00	(0.11)	(28.11)
73	0.00	(0.11)	(28.22)
74	0.00	(0.11)	(28.33)
75	0.00	(0.11)	(28.44)
76	0.00	(0.11)	(28.56)
77	0.00	(0.11)	(28.67)
78	0.00	(0.11)	(28.78)
79	0.00	(0.11)	(28.89)
80	0.00	(0.11)	(29.00)
81	0.00	(0.11)	(29.11)
82	0.00	(0.11)	(29.22)
83	0.00	(0.11)	(29.33)
84	0.00	(0.11)	(29.44)
85	0.00	(0.11)	(29.56)
86	0.00	(0.11)	(29.67)
87	0.00	(0.11)	(29.78)
88	0.00	(0.11)	(29.89)
89	0.00	(0.11)	(30.00)
90	0.00	0.00	(30.00)
91	0.00	0.00	(30.00)
92	0.00	0.00	(30.00)
93	0.00	0.00	(30.00)
94	0.00	0.00	(30.00)
95	0.00	0.00	(30.00)
96	0.00	0.00	(30.00)
97	0.00	0.00	(30.00)
98	0.00	0.00	(30.00)
99	0.00	0.00	(30.00)
100	0.00	0.00	(30.00)
101	0.00	0.00	(30.00)
102	0.00	0.00	(30.00)
103	0.00	0.00	(30.00)
104	0.00	0.00	(30.00)
105	0.00	0.00	(30.00)
106	0.00	0.00	(30.00)
107	0.00	0.00	(30.00)
108	0.00	0.00	(30.00)
109	0.00	0.00	(30.00)
110	0.00	0.00	(30.00)
111	0.00	0.00	(30.00)
112	0.00	0.00	(30.00)
113	0.00	0.00	(30.00)
114	0.00	0.00	(30.00)
115	0.00	0.00	(30.00)
116	0.00	0.00	(30.00)
117	0.00	0.00	(30.00)
118	0.00	0.00	(30.00)
119	0.00	0.00	(30.00)
120	100.00	0.00	70.00

Production at scale

Credit as a Growth Catalyst

Takeaway

Companies move from crawl to walk to run by delivering for creditworthy customers and building relationships with lenders in parallel. Faster recycling of equity unlocks new capacity and compounds unit growth.

Day 0 Capacity, broken out by cash sources

Customer prepayment Lender Company equity

Unfinanced$3033 units

Crawl$3033 units

Walk$5$14$1378 units

Run$18$12Not limited by equity

Units of production running at once on $1,000 of equity allocated to units of production.

No new equity is required to support incremental growth.

Active units of production over two years

Assumes the business is not demand-constrained and does not experience margin compression. For the purposes of this analysis, the key growth rate limiter is the company’s ability to secure credit or other sources of non-dilutive capital at attractive terms. Model assumes payment terms of net-30, net-60, and net-90 days, spread evenly across the unit base.

Illustrative 5-Year Model

Financing can unlock non-linear scaling, bringing the company from breakout to durable business without diluting founders, while lenders get repaid from contracted cash flows.

	Unfinanced	Crawl	Walk	Run
Cost of capital
Share of units financed	0.0%	30.0%	50.0%	70.0%
Share of total TCV advanced before completion	—	0.0%	3.5%	9.5%
Maximum debt capacity (as share of total TCV)	—	0.0%	3.5%	27.9%
Weighted average cost of financing	—	28.6%	19.5%	11.9%
Cost of equity	25.0%	25.0%	25.0%	25.0%
Blended cost of capital	25.0%	25.3%	22.7%	11.7%
Unit growthYear 1 → Year 5
Active units of production	54 to 27.1K	83 to 97.8K	100 to 203.3K	299 to 14.9M
Growth vs. Unfinanced	1.0x	3.6x	7.5x	550.1x
Active units CAGR, Year 1 to Year 5	373%	486%	572%	1,394%
Units of production completed over 5 years	40.4K	120.6K	228.7K	10.4M
Revenue*Year 1 → Year 5
LTM revenue	$6,300 to $3.5M	$7,100 to $11.2M	$8,870 to $21.2M	$20.7K to $1.0B
Growth vs. Unfinanced	1.0x	3.2x	6.0x	283.6x
LTM revenue CAGR, Year 1 to Year 5	387%	530%	599%	1,385%
RR revenue (last 6 months × 2)	$10.0K to $4.9M	$11.6K to $15.9M	$14.8K to $30.7M	$34.8K to $1.6B
Implied value of the units of production†Year 1 → Year 5
Implied segment enterprise value (RR revenue × 10x)	$100.0K to $48.6M	$116.0K to $159.2M	$148.2K to $306.9M	$348.0K to $16.0B
Unit-level debt (non-recourse)	$0	$0	($1.0M)	($129.7M)
Segment cash (equity pool)	$168.5K	$618.7K	$1.3M	$49.2M
Year 5 implied segment equity value	$48.7M	$159.8M	$307.3M	$15.9B
Segment enterprise value created, Year 1 to Year 5	$48.5M	$159.0M	$306.8M	$16.0B
MOIC, entry at Unfinanced segment enterprise value (no dilution)	1.0x	3.3x	6.3x	328.4x

† Values only the units-of-production segment, funded by the equity allocated to it. Debt is unit-level, non-recourse financing secured by each unit’s contract, not corporate debt. Cash is the segment’s equity pool, including reinvested profit. The rest of the business and corporate-level assets and liabilities are excluded.

Analysis does not assume margin expansion or multiple expansion. Absolute figures are illustrative, not forecasts. Compare lines using growth vs. Unfinanced. 50% of each unit’s profit is assumed to be reinvested in new units, with the remainder funding corporate-level operating expenses and new investments (not modeled in this analysis). Figures are on a cash basis and exclude depreciation and amortization, which run about 11–14% of revenue in capital-intensive industries such as power, utilities and telecom (Damodaran, NYU Stern, January 2026). Each unit is underwritten on a full-payout basis, without relying on redeployment or residual value. No asset sale is assumed at the end of five years. Blended cost of capital excludes the price discounts given in exchange for customer commitments. * List prices and unit costs rise 3% a year, in line with inflation.

Worked example

Price and margin

List price$

Cash margin (S0)%

Setting the margin rescales the three cost lines below. Changing a line moves the margin.

Unit costs

Upfront costs$

Fixed recurring costs$

Variable costs at plan$

Variable cost premium%

Financing

Minimum equity contribution, % of unit costs%

Applies to the lender-financed scenarios (S2 and S3) in both the worked example and the growth model.

Timing

Negotiation and signing days

Procurement and setup days

Production live days

Days until customer pays

Credit as a Growth Catalyst

Equity allocated to units of production$

Share of unit profit reinvested%

TEV / RR Revenue Multiple

Multiple fixed from Year 1 to Year 5.

Annual price escalator%

Annual cost escalator%

Cost of equity%

Vary by phase (30% at breakout to 20% at scale)

The Arc of Financeability

Days to cash neutral for one unit of production

Takeaway

Cumulative net cash flow for one unit of production ($)

Methodology

Credit as a Growth Catalyst

Takeaway

Day 0 Capacity, broken out by cash sources

Active units of production over two years

Illustrative 5-Year Model

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