Revenue Sharing Investment Agreement Template for the United States

A Revenue Sharing Investment Agreement is a legal contract where you receive capital from an investor in exchange for a predetermined percentage of your company's future revenues. Unlike traditional equity financing, this arrangement allows you to maintain full ownership and control of your business while providing investors with returns directly tied to your performance under United States federal securities laws.

When do you need this document?

You need this agreement when seeking alternative financing that doesn't involve giving up equity or taking on traditional debt. Startups and growth-stage companies often use revenue sharing when they have predictable revenue streams but want to avoid dilution or when traditional bank loans aren't accessible. This structure works particularly well for businesses with recurring revenue models, such as SaaS companies, subscription services, or established service providers. You'll also need this document when investors prefer performance-based returns over equity stakes or when your company's valuation makes equity investment unattractive to either party.

Key legal considerations

Revenue sharing agreements must carefully define what constitutes "revenue" to avoid disputes, including whether gross or net revenue applies and which income streams are included. You must establish clear calculation methods, payment schedules, and reporting requirements to ensure transparency. The agreement should address what happens during low-revenue periods, including minimum payment thresholds and catch-up provisions. Consider including caps on total returns to limit your long-term obligations and specify termination conditions. You'll need to address investor rights regarding financial information access and potential business operation restrictions. The contract should also cover what happens if your business is sold, merged, or undergoes significant restructuring.

Legal requirements in United States

Revenue sharing agreements must comply with federal securities laws, particularly the Securities Act of 1933 and Securities Exchange Act of 1934, as they may be classified as securities under the Howey Test. You must determine whether the arrangement requires SEC registration or qualifies for exemptions such as Regulation D offerings. State Blue Sky laws add additional compliance requirements, including potential registration, disclosure obligations, and investor qualification standards that vary by jurisdiction. The Investment Company Act of 1940 may apply if your arrangement involves pooled investments from multiple parties. Tax considerations under the Internal Revenue Code affect how revenue sharing payments are classified and reported. You must also ensure compliance with state contract laws and business entity regulations. Proper legal counsel is essential to navigate these complex regulatory requirements and structure compliant agreements.