.png)
Education
Financing Growth Without Dilution: A Founder’s Guide to Smarter Capital with Cassie Rosenthal
At Female Founder Collective's The 10th House, we know that most founders assume venture capital is their only path to scale. However, they quickly realize equity dilution can cost them control, optionality, and long-term upside.
In our exclusive conversation with Cassie Rosenthal, Chief Marketing Officer and third-generation stakeholder of Rosenthal Capital Group, we discovered how non-dilutive financing can fuel growth without sacrificing ownership and why founders should be exploring these options far earlier than they think.
Cassie's track record speaks for itself. After running art galleries in Chelsea and Berlin for a decade, she joined her family's 88-year-old commercial finance firm that supports leading consumer brands with loan sizes from $500K to $40M+. She's worked with DTC apparel companies that scaled from $15M to $80M in two years, beverage brands that jumped from $10M to $70M, and digital creator-launched skincare lines navigating all-door Target launches. Her biggest revelation? "Working capital is for sustainable growth. Equity is to protect the investment until exit."
With scaling consumer brands requiring massive inventory investment, production cycles creating cash flow crunches, and wholesale expansion demanding capital most founders don't have, understanding the full landscape of non-dilutive options (think asset-based lending, factoring, PO financing, revenue-based lending and more) has never been more critical for emerging brands trying to grow without losing control.
The Capital Options Founders Don't Know Exist (Until It's Too Late)
Most founders follow the "traditional path": raise equity or venture, give up ownership, repeat. The problem is that equity dilution often comes too early, and founders lose control before they've even proven sustainable unit economics.
Cassie's philosophy is different: use non-dilutive financing as a lever for growth, and save equity for strategic leaps that actually require it.
Twenty years ago, brands borrowed more on receivables than inventory because retailers gave lead time before fulfillment and brands grew slower. Today, high-growth DTC brands can be doing $5M, suddenly blow up on social, and jump to $40M the next year. That speed requires different capital strategies, but founders who don't understand their options get trapped in expensive revenue-based loans or dilute ownership prematurely.
Here's what Cassie revealed about financing growth without giving up equity:
- Understand your business model before choosing capital—industry, customer, and supply chain determine what you need. Before diving into financing, ask yourself: What industry are you in? Who are you selling to (DTC, wholesale, or retail later)? How do you source goods and what does your supply chain look like? A DTC beauty brand selling on Sephora has completely different capital needs than a wholesale-first apparel brand with seasonal spikes. Understanding these fundamentals prevents taking financing you don't need or can't service.
- Asset-based lending grows with you as flexible capital that scales with your business. ABL is a revolving line of credit secured by accounts receivable (70-90% advance rate) and inventory (50-70% advance rate, based on cost). Your loan amount grows as your assets grow, perfect for brands with seasonality or product development cycles. The requirements: collateral monitoring and financial reporting systems. Cassie's example: a DTC apparel company started at $15M revenue and scaled to over $80M by 2025, financing inventory through Q4-heavy sales cycles.
- PO financing funds specific opportunities short-term but requires healthy margins. Purchase order financing funds up to 100% of goods for confirmed orders, typically for 2-3 months. It's useful for early stage brands without great supplier terms or large seasonal rollouts your working capital can't cover. The economics: you need minimum 20% margins. Think of it as an equity alternative for driving sales without giving up ownership. Cassie's example: a beverage company used ABL plus PO financing for a Costco rollout, scaling from $10M to $70M in two years.
- Revenue-based financing helps early stages but know when to graduate to cheaper capital. For early brands with consistent growth, revenue-based financing advances money based on 1-3 months of sales, then takes a percentage as repayment (auto-debited from your account). Cassie's warning: "Don't use it too long. Know when to exit and graduate to cheaper capital like ABL or factoring." If revenue is volatile or you're low on cash, the auto-pull can hurt. Many brands come to Rosenthal after hitting bumps with expensive early-stage capital. Recognizing when to graduate is crucial to avoid high fees shrinking your cash runway.
- Lenders care about margins, inventory turn, and financial leadership over profitability. Rosenthal doesn't require profitability because as collateral lenders, they care about asset quality. What they examine: your industry, your customers (DTC versus wholesale mix), your margins (ability to service debt), inventory turn and velocity, whether you're current on payables and taxes, existing debt load, collateral sufficiency, and financial leadership (do you have a CFO who can explain margins and unit economics clearly?). Milestones signaling you're financing-ready: 3+ years in business, $3-5M in annual sales, good inventory turns, expanding customer base, strong margins, and real-time reporting systems.
What to Do Right Now to Make Smarter Capital Decisions as a Founder
1. Treat this quarter like a wellness check for your business. Take stock of your financial health and be brutally honest: what's working, what's not, and how can you improve the deficits?
2. If you're the face or creative visionary, find someone you trust for finance strategy. Bring in a fractional CFO, part-time accountant, or financially strong partner early. Set up clean bookkeeping, reporting systems, and inventory visibility. This makes you more fundable and better able to navigate opportunities and downturns.
3. Growth is great, but can your business actually handle it? Sometimes you must say no to grow properly. Rebecca reinforced this: they said no to their first Nordstrom order because they weren't ready, and Nordstrom came back later. During COVID, they lost 70% of their business overnight. She prefers moving slower and safer, avoiding emergency moments.
4. Start talking to lenders early, even before you hit their revenue thresholds. Ask: what will you look for when I'm at $3-5M? What systems do I need? What pitfalls should I avoid? This prevents fire-drill fundraising and builds relationships so when you have a Target PO, lenders already know you and can move quickly.
Your Invite to 10th House: A Community that Fuels Your Journey
At Female Founder Collective’s 10th House, we exist to democratize access to the strategies, insights, and connections that have traditionally been locked behind closed doors. Our community fosters authentic connections, celebrates victories, and shares honest advice, creating a space where founders can grow together.
As a member of The 10th House, here’s what you can unlock:
- Direct access to industry leaders who meet you where you are and give candid, real-world advice.
- Supportive workshops, resources, and frameworks you can apply the same day.
- Opportunities to connect with founders who celebrate your wins and help you through setbacks—with zero judgment, just true understanding.
- Front-row seat to future events like our intimate fireside chats, founder cohorts, and exclusive pitch demos.
Apply now below to join our vibrant community and unlock the resources, insights, and connections you need to scale your entrepreneurial journey. Let’s build the future, side by side 💌
Apply for 10th House Membership
What's Next?
Become a part of a community of like-minded female founders. Inside The 10th House, you’ll find fellow founders, investors, and above all, a community.
Filed in:
