Instead of an interest rate, a Revenue Share has an investment multiple. As a hypothetical example, a 1.5x multiple with a 5-year pay back could result in a 12 - 14% internal rate of return (IRR).
If the company's revenues are better than expected, payback could happen earlier and lead to a higher IRR. If revenues are lower, then payback will take longer, lowering the IRR, or leave money still owed at maturity of the note.
Every investment also carries risks, including the risk of losing some or all of your money. Vicinity does not predict or project performance, and the performance of any specific investment will vary.
A “rev share” is a debt structure that works like a royalty payment. The business agrees to pay a set percentage of their revenue until the investor is paid back a “multiple” of their investment. For example, a business may agree to pay 5% of their revenues each quarter until investors make 1.5x (the multiple) their original investment. As an investor, you would expect to turn a $2,000 investment into $3,000. The amount of time it takes to pay is dependent on the business’ revenue.
Funds will be used for:
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