Revenue Share Calculatorintro
PayBack Share is a revenue share agreement that may be a good choice for:
- Companies that generate or expect to generate cash (your operating earnings will have to be > 5% of your revenue for this to make sense);
- LLC’s that are looking for ways to raise funds without the need to issue K-1s; and
- Companies that want to maintain a clean capital structure in anticipation of a future venture capital fundraising round.
Here's how it works:
- You share at least 5% of your revenue annually;
- No distribution is required until the second full calendar year and you are allowed one year of forbearance as needed;
- Distributions are capped at 2x the invested amount, at which point your obligation is fulfilled.
Here are some of the advantages of choosing Revenue Share:
- It does not dilute the ownership of current shareholders or the control of management
- It avoids a prolonged negotiation over valuation and a “messy cap table”
- It may be easier to raise capital and attract investors by offering the potential to earn regular cash distributions
- It gives you the chance to keep more of the upside since once investors’ have received 2x their money back, you will have no further obligation
Use of this calculator does not constitute investment advice. We are providing this tool to help you evaluate potential revenue sharing scenarios and payback periods. Any determination as to your use of this security and the amounts involved is your sole responsibility.