It’s 2025, and one thing is clear: subscriptions aren’t just for software anymore. The model now works for physical products too—both consumable subscriptions and consumer durable subscriptions.

What’s interesting about subscriptions for consumer durables is that, while financing and leasing (car finance, bike leasing, equipment hire) have existed for ages, true subscriptions are newer and growing fast.

Resource: Subscription vs. rental vs. lease what's the difference.

In Europe and beyond, the model now spans many industries and product types. As it gains popularity, one practical question keeps coming up: Who pays for the product upfront when the revenue arrives monthly?

So if you sell or manufacture durable products (bikes, furniture, electronics, appliances, machines) and want to offer them as a service or subscription-based product, this guide is for you.

In this guide we discuss & explain:

• The cashflow challenge in subscription-based business models
• What needs financing in a pilot
• Different types of financing options available
• Guide to choosing a financing model for your subscription-based model
• Which financing models are common in each industry

The cashflow challenge in subscription models

The subscription economy has fundamentally altered how businesses generate revenue, particularly for asset-heavy industries traditionally reliant on one-time purchases.

And when companies shift (or want to shift) from selling consumer durables outright to offering them on a subscription (or “product-as-a-service”) basis, they face a fundamental cash flow challenge.

Instead of receiving a large upfront payment, revenue is realised over months or years, while the upfront cost of producing or procuring the product still needs to be paid immediately.

This often creates an initial cashflow dip – a phenomenon sometimes called the “fish model,” where costs spike before the steady subscription revenues catch up.

In practical terms, the business must finance the gap between delivering an expensive asset (like an appliance, bike, or machine) and collecting revenue gradually. The move to a subscription-model requires investment & patience but the advantages are undeniable. and evident from the success of existing players.

What needs financing in a pilot

Before you launch a subscription pilot, plan for two kinds of spend: the asset itself (the bikes, phones, furniture, or machines) and the operating costs that make the pilot work.

The asset is usually the biggest cheque; the rest are the moving parts that turn a product into a smooth subscription experience.

• Asset purchase: the physical products you’ll deploy in the pilot.
• Customer acquisition (CAC): ads, partnerships, and sales outreach to win your first users.
• Onboarding & delivery: shipping, installation, setup kits, and first-use support.
• Refurbishment & repairs: spare parts, labour, swap units, and reverse logistics.
• Operations: customer support, recovery/repo, storage, insurance, and day-to-day admin.
• Software & tools: subscription platform (e.g., circuly), billing, CRM, analytics, and device tracking.
• Working-capital buffer: cash for timing gaps, deposits, chargebacks, and occasional refunds.
• Testing & analytics: user research, product testing, and data analysis to refine the offer.
• Compliance & risk: contracts, KYC/AML if needed, data/privacy, and basic legal reviews.

What are the different financing options

Here are the main ways companies fund assets for subscriptions:

• Revenue-Based Financing
• Gradual self-financing
• Sale & leaseback
• Special Purpose Vehicle
• Bank loans or equipment leases
• Manufacturer/supplier partnerships

1. Revenue-Based Financing (RBF)

Revenue-based financing gives you cash now and lets you repay a small, fixed percentage of your monthly revenue until you’ve paid back an agreed total. Payments rise when sales rise and fall when sales dip. It’s quick to set up, flexible, and doesn’t require you to give up ownership in your company. The trade-off is that it usually costs more than a bank loan and is meant to be repaid fairly quickly (often in 12–24 months).

Why RBF isn’t a good fit for buying the assets

Using RBF to buy the actual products (bikes, phones, machines, furniture) is usually a poor match. Durable assets earn money over several years, but RBF wants its money back much sooner—so cash goes out too fast and your monthly margin gets squeezed. There’s also a practical conflict: if you later add a classic asset lender or lessor, they’ll want to be paid first from subscription income; an RBF deal that already takes a cut of revenue can block or shrink that cheaper asset funding. Finally, RBF doesn’t scale well with fleet growth because the advance is tied to revenue, not to the resale value of the assets.

Where RBF does help in a pilot (the “other parts”)

RBF can be handy for the non-asset costs that make the pilot work—short-cycle spend that turns into revenue quickly:

• Customer acquisition (CAC): ads, partnerships, launch campaigns.
• Onboarding & delivery: shipping, installation, starter kits.
• Refurbishment & swaps: parts and labor for early returns.
• Operations & tools: support, software subscriptions, basic logistics.

In short: use RBF for growth and operations, where flexible, revenue-linked repayments make sense; avoid using it for the assets themselves, which are better matched with longer-term, asset-backed funding.

2. Gradual Self-Financing

In gradual self-financing, the company uses its own cash reserves to fund the assets for subscriptions, at least in the early stages. This means internally covering the cost of equipment and rolling out the subscription offering slowly, reinvesting the incoming subscription payments to fund additional units. By relying on internal cash, companies can handle the initial “fish belly” dip in cash flow without immediately taking on debt or outside capital.

his approach is common for pilot projects or smaller companies testing the model. For example, Zuora’s 3-10-50 model for product-as-a-service suggests that when annual subscription volumes are small (e.g. under $3M ARR), businesses often start by financing assets on their own books to prove the concept. The benefit is avoiding interest costs or dilution early on, but the obvious limitation is that self-funding can only take you so far – most firms cannot fill their balance sheet with too many assets without straining cash reserves. As the subscription business scales, external funding usually becomes necessary to keep growing.

Where gradual self-financing fits

• Works for very early pilots when you want speed and control.
• Fine for non-asset costs too (marketing, tools) if you have the runway.

When it’s a poor fit

Scaling beyond a tiny pilot. Your cash gets tied up and growth slows.

3. Sale & Leaseback of Equipment

In a sales & leaseback of equipment model, the company sells the physical products (equipment, devices, etc.) to a financier or leasing company for immediate cash, and then leases the same assets back in order to provide them to subscribers. Effectively, it converts a big upfront expenditure into a stream of lease payments, which can be aligned with the subscription income. This approach smooths out cash flow and keeps the assets off the provider’s balance sheet, which can improve financial metrics and debt capacity.

The advantage of sale/leaseback is that it can provide up to 100% of the asset’s value in cash, as noted in equipment finance practice, making it more effective than a traditional loan in some cases. The trade-off is the business takes on lease payment obligations and must ensure the subscription revenue covers these over time.

Where it fits

• Strong for asset financing, especially if you already own stock and need immediate liquidity.
• Lets you turn big upfront costs into a monthly expense.

When it’s a poor fit

• If lease payments would squeeze your margin or your utilisation is uncertain.

4. Special Purpose Vehicle (SPV)

Another financing mechanism used by subscription businesses is setting up Special Purpose Vehicles (SPVs). An SPV is a separate legal entity (subsidiary or trust) created to hold the assets and the corresponding debt, ring-fencing them from the parent company. Companies use SPVs to finance equipment off their main balance sheet, which helps isolate risk and may make lenders more comfortable. For example, Berlin-based Grover, a tech gadget subscription platform, funds its inventory of electronics by geography/product through SPVs.

As Grover's CFO explained "In our case, we have special-purpose vehicles which belong to the Grover Group. They’re essentially separate legal entities which let us borrow from lenders against the residual value of the devices. This keeps the company protected if lenders come calling, and it also keeps things like profits with the company."

Where it fits

• Best for asset financing at scale. It can grow into large, non-dilutive facilities.
• Also helps ring-fence risk away from your main business.

When it’s a poor fit

• Very early pilots without data. SPVs need setup work, reporting, and proof on residual values.

5. Bank loans and asset-backed lending

Many subscription model firms also turn to bank financing or specialised asset-based lenders to fund their equipment. Banks may provide term loans or revolving credit lines secured by the assets or the predictable subscription receivables. From the company’s perspective, debt financing can be much cheaper than equity – especially if the lender is given strong collateral rights (first claim on the assets). In practice, once a subscription business has some traction, lenders are often willing to lend against the fleet or inventory at relatively low interest rates. For instance, Grover’s asset-based loans carry interest rates around 4–5% for a startup, and potentially as low as 2–3% for a more established company.

The key is that the lender needs confidence in the residual value of the product (and the company’s ability to redeploy or resell it). In Europe, there has been growing lender appetite to finance “product-as-a-service” ventures – from e-scooter rentals to car subscriptions – using the devices as collateral. In fact, virtually all capital-intensive subscription startups in mobility (e-scooter, e-bike, car subscriptions) rely on some form of debt or asset financing to fund their fleets.

The same goes for B2B equipment-as-a-service: for example, dental tech startups like DrSmile (aligner machines) or industrial hardware providers use asset-based loans or leases for machines costing €100k+, rather than paying cash for each unit.

Where it fits

• A solid, often low-cost way to fund the asset (cars, bikes, devices, machines).
• Simple to understand and scale as long as assets are standard and resellable.

When it’s a poor fit

• Very niche or hard-to-value assets, or if you lack any performance track record.

6. Partnership with suppliers and/or manufacturers

For companies that are retailers or service providers (not the original manufacturers of the product), forming partnerships with the manufacturers can be an effective way to ease financing needs. In a manufacturer partnership, the product maker might support the subscription program by providing inventory on consignment or offering extended payment terms. In other words, the manufacturer allows the reseller to acquire products with little or no upfront payment, getting paid over time as the subscription revenues come in. This is essentially a form of vendor financing and risk-sharing.

Where it fits

• Great for asset access when you’re a retailer/distributor (not the OEM).
• Also helpful for non-asset costs (e.g., setup support, spare parts agreements).

When it’s a poor fit

• If the supplier isn’t invested in subscriptions or you need more flexibility than their program allows.

Guide to choosing a financing model for your subscription-based model

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Which financing models are common in each industry

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Conclusion: the market is rallying around “as-a-service”—and the toolbelt is getting bigger

As the “as-a-service” model gains real traction, a whole ecosystem of financing and enablement solutions is popping up to make it easier to launch and scale. You’ll see asset-backed lenders and lessors comfortable with SPVs and fleets, revenue-based financing players for marketing and working capital, pay-per-use financiers (often in partnership with OEMs) where payments track machine usage, and ops platforms (like circuly) that tie billing, contracts, and asset lifecycles together. Add in refurbishment and resale partners and embedded insurance, and the stack looks far more plug-and-play than it did a few years ago.

Plenty of brands prove the path. StrollMe and Bike Club both started as subscription-first companies with small fleets, learned fast, and—once the model worked—raised additional funding and partnered more deeply with manufacturers to secure product supply on better terms. Grover followed a similar arc for consumer electronics: begin focused, build data on returns and resale, then scale with asset-backed facilities in dedicated SPVs. On the OEM side, you have manufacturers that bake finance into the offer—think Hilti Fleet (tools as a service with bundled service and swaps) or Care by Volvo (cars on subscription backed by the automaker’s own finance arm). These examples show a repeatable pattern: prove demand and operations, then financing options and supplier support open up quickly.

The advantages of this business model are well known—lower upfront cost for customers, predictable revenue for brands, circular economics through refurbish-and-reuse, and real-world product data. Financing is the sticky part—and in some cases, the blocker—but it’s also solvable with the right split: fund the asset with asset-friendly tools (lease/loan, sale-and-leaseback, SPV as you scale) and fund the operations with flexible working-capital tools (supplier terms, receivables finance, and small RBF if you need it). Start small, instrument everything, show proof—and the capital stack tends to follow.