Education Center For Investors

How Revenue Sharing Notes Work

Where a business agrees to pay you a percent of their monthly revenue until you receive the total payment. Monthly payment, if any, may be different every month.

Example: you invested $1,000 in a revenue sharing offering on NextSeed

     

Investment Multiple: 2X How much the business agrees to pay you in total by the maturity date by adding up monthly payments.

Revenue Sharing Percentage: 5% How much the business agrees to pay investors each month from its gross revenues. (This is not in addition to the investment multiple—this is how a business reaches the investment multiple payment)

Maturity: 48 months

 Securities are not guaranteed or insured and investors may lose some or all of the principal invested if an issuer cannot make its payments.

How Payments Work

How are payments calculated?

Your payment depends on how much of the total investment pie you took with your principal investment.

Suppose that the total amount a business raised was $100,000 and you invested $1,000

Your $1,000 investment slice out of the total $100,000 raised is:

Your investment was 1% of the total funds a business raised.

 You get 1% of the total payment a business makes to all investors each month so long as the business is able to make payments.

How Much Does A Business Pay To Its Investors Each Month?

The payment a business owes to its investors each month depends on its gross revenues. This means that payments to investors are calculated first before costs are deducted.

Let’s say the business has the following hypothetical revenues:

What Is My Monthly Payment?

Your monthly payment is your share of the total payment made to investors.

*Your monthly payment is your share of the total payment, if any, made to investors.

When Do Payments End?

Payments end when the business pays you back your total payment, or when the maturity date is up, whichever is earlier.

The investment multiple determines what the total amount a business will pay you. In this case:

So if the investment’s maturity date is in 48 months, but the business pays you $2,000 by month 40, then payments stop at month 40. If it’s been 48 months and the business has only paid you $1,500, then the business contractually owes you $500 at the maturity date or risks default.

Disclaimer: This example is for illustrative purposes only and does not reflect an actual deal or performance. The terms of each deal differ. The total payments above do not take into account NextSeed fees of 1% on each payment made to investors. The exact length of time that it will take a business to pay each investor in full cannot be known in advance. Payments are not guaranteed or insured and investors may lose some or all of the principal invested if the business cannot make its payments. There are currently no opportunities to exit or resale NextSeed investments. After an offering has closed, your investment is committed to the business.

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