Dakota Sheets funded his first Walmart rollout with a home equity line of credit. His second one nearly broke him.

Sheets founded DogSauce, a pourable dog food topper made with sweet potato and bone broth, a few years before landing a 2024 distribution deal with Walmart that put the DTC brand into about 1,400 stores.

"It was phenomenal for me," Sheets told Retail Brew. "It's the first time I'm looking at significant cash flow and not just focused on cost per acquisition online and starting to focus on really what this could look like from a retail front."

The order demanded production at an unprecedented scale for the small bootstrapped brand, and Sheets lacked the cash to fund it. "I needed money, and I used my house," he said.

The good news kept coming. Early this year, Sheets learned Walmart would more than double DogSauce's footprint, expanding distribution to 3,750 stores. Having already tapped his home equity, Sheets could not personally cover the expansion. His bank said no.

"Banks will give you money if you have two or three years of…a lot of revenue," Sheets said. "But when you're a startup like ours…banks won't look at [us] because we don't have the historicals."

He turned to an online small-business lender, and interest charges started piling up long before he shipped a single unit to Walmart—let alone got paid by the retailer. "I was quickly seeing that we were paying atrocious amounts of interest every week, and we're still waiting for packaging to get here," Sheets said. His interest rate reached 36%.

The dream order was turning into a nightmare. Then, through Walmart, Sheets learned about Bridge.

Forward-looking financing

Bridge is a three-year-old financial platform that reports it has provided more than $800 million in financing. Traditional banks underwrite loans by looking in the rearview mirror—scrutinizing last year's profits, inventory and other assets. Bridge operates in a category often called "purchase order financing" and calls its product "production financing," lending against what it sees through the windshield: purchase orders from retailers.

"Fundamentally, the biggest issue is what we're doing is forward-looking," Harte Thompson, who co-founded Bridge with Rohit Mathur, told Retail Brew. With traditional banks, "it's all backward-looking credit programs, and I don't mean that in a bad way," Thompson said.

Bridge also does not require repayment until recipients have been paid for their orders.

Bridge maintains a partnership with Walmart, and Thompson said Walmart receives no financial incentive. The retailer wants to distinguish itself by stocking up-and-coming brands—and by making sure those brands can fulfill big orders.

Walmart wants "to make sure that brand feels like they can actually scale," Thompson said. "And obviously, Walmart's competing with Target and Costco and many other retailers for that brand's time and attention."

Thompson acknowledges Bridge's interest rates run higher than bank rates, though the gap is "not as astronomical as you may think." The loans make more sense for higher-margin categories like beauty and apparel than for slimmer-margin businesses like beverages.

"Once you get down into the lower double digits, like the closer to 10% or even single digits for sure, that's when I would candidly tell the business owner, 'Hey, we could do this, but I wouldn't say it's what's best for you,'" he said.

For brands that fit, the capital pool is growing. A new partnership with LuminArx Capital Management will provide up to $500 million in financing specifically for brands fulfilling orders for retailers.

No equity, no problem

When Sheets got the Walmart expansion news, one option was taking on investors. He refused.

"It's the biggest moment as an entrepreneur where you don't want to give up equity," Sheets said. "You've been able to get to this, and it's time to see it through…You have to push all your chips in."

DogSauce won Bridge approval and received the loan in mid-May. The capital funded production costs for the Walmart order and paid off the online small-business loan before its interest compounded further.

"We will pay [Bridge] back in August and likely be asking for another loan," Sheets said. "Maybe twice the size."