Revenue Financing

Revenue-based financing, also known as royalty-based financing, is a method of raising capital for a business from investors who receive a percentage of the enterprise's ongoing gross revenues in exchange for the money they invested. In a revenue-based financing investment, investors receive a regular share of the business's income until a predetermined amount has been paid.

Typically, this predetermined amount is a multiple of the principal investment and usually ranges between three to five times the original amount invested. Revenue linked payments, unlike fixed EMIs, are flexible and vary with the brand’s revenue: going up for great-revenue periods and moderating for low-revenue periods.

It is an alternative investment model versus more conventional equity-based investments, such as venture capital and angel investing, as well as traditional debt financing.