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Revenue Sharing Agreements explained

CapitalTech works with entrepreneurs by arranging revenue-sharing agreements to help finance their projects. Here’s a breakdown of how it typically works:  

Our approach allows investors to participate in the revenue of a company without owning traditional equity shares. Instead, investors receive tokens that represent a share of the revenue generated by the company. These tokens can be traded on a platform provided by CapitalTech, offering liquidity to investors. This model can be attractive to both investors and companies, as it provides a new way to raise capital and diversify investment portfolios.

Documents:

  1. Engagement Agreement: This is a contract between CapitalTech and a company looking to raise capital through revenue sharing. It outlines the terms of the engagement, including the services CapitalTech will provide, the fees involved, and the responsibilities of both parties.
  2. Revenue Sharing Contract: CapitalTech signs a contract with a company to define the terms of the revenue sharing agreement. The “Revenue Sharing Agreement” specifies how the revenue will be shared, the duration of the agreement, and any other relevant terms such as minimum and maximum revenue thresholds.
  3. Security agreement The Revenue Sharing Agreement calls for for a security agreement that outlining the terms and conditions under which one party (the “company”) provides a security interest in certain assets to another party a “SPV formed by “CapitalTech”, the secured party”) to secure the performance of obligations related to the revenue sharing agreement.
  1. Revenue Sharing Proforma Model: This is a financial model that projects the expected revenue and the corresponding distribution to investors based on the terms of the revenue sharing agreement. It helps both CapitalTech and the company understand the potential outcomes of the agreement.
  2. PPM (Private Placement Memorandum): This document is used to raise capital from investors. It provides detailed information about the investment opportunity, the risks involved, the terms of the investment, and the use of the proceeds. It is a legal document that must comply with securities regulations.
  3. Operating Agreement: This document outlines the governance structure and operational details of a SPV managed by CapitalTech, specifying how decisions are made, how profits and losses are distributed, and the rights and responsibilities of the members (owners) of the revenue-sharing agreements. It outlines the operational details between CapitalTech and the owners of the revenue-sharing agreements, including the governance structure, decision-making processes, profit and loss distribution mechanisms, and the rights and responsibilities of the members (owners) of the revenue-sharing agreements.

The agreement also details how CapitalTech will manage the revenue-sharing agreements, including processes for distributing revenue to investors, handling disputes, and ensuring compliance with relevant regulations. It specifies the roles and responsibilities of the owners of the revenue-sharing agreements, including their rights to participate in decision-making processes and receive updates on the performance of the agreements.

Overall, the Operating Agreement is designed to provide clarity and transparency in the relationship between CapitalTech and the owners of the revenue-sharing agreements, ensuring that all parties understand their rights and responsibilities and that the agreements are managed in a fair and effective manner.

  1. Subscription Agreement: This is a contract between an investor and CapitalTech, outlining the terms of the investment. It specifies the amount of the investment, the payment terms, and the rights and obligations of the investor and CapitalTech.
 

Revenue Sharing Agreements explained