📘 What is Revenue-Based Investment?
Revenue-Based Investment is a type of funding where:
- Investors provide capital to a business
- Business repays a fixed percentage of its monthly/quarterly revenue
- Repayment continues until a pre-agreed multiple of the invested capital is achieved
Key features:
✔ Returns linked to business revenue, not profit
✔ Flexible repayment schedule
✔ No equity dilution for founders
🧩 Benefits of Revenue-Based Investment
- Predictable cash flows for investors
- Short-to-medium-term investment horizon
- Supports SME and startup growth
- Lower risk compared to equity investment
- Alignment of investor and business interests
🛠 Step-by-Step Process for Revenue-Based Investment in India
Step 1: Define Your Investment Goals
Determine:
✔ Amount to invest
✔ Expected return multiple (e.g., 1.5× or 2× of principal)
✔ Risk tolerance
✔ Investment duration (typically 1–5 years)
Step 2: Choose the Investment Platform
Popular platforms in India for revenue-based investment include:
✔ LetsVenture
✔ Venture Catalysts
✔ Kissht Biz
✔ AngelList India
Check platform credibility, verification of businesses, and legal framework.
Step 3: Complete KYC & Account Setup
- PAN Card
- Aadhaar or other address proof
- Bank account for fund transfer
- Platform may require income proof or investor accreditation
KYC ensures compliance with Indian regulations and secure transactions.
Step 4: Evaluate Businesses for Investment
Before investing:
✔ Check revenue history and projections
✔ Understand the repayment percentage and duration
✔ Assess industry, competition, and growth potential
✔ Review financial and legal documents
Diversify across multiple businesses to reduce risk.
Step 5: Decide Investment Amount & Terms
- Choose the principal amount per business
- Agree on revenue percentage and target multiple
- Understand repayment frequency (monthly/quarterly)
- Confirm minimum investment requirements
Step 6: Fund the Investment
- Transfer capital via platform
- Execute a Revenue Sharing Agreement (RSA)
- Platform tracks revenue collection and repayment schedule
Investors receive regular payments until agreed return is achieved.
Step 7: Monitor Performance
- Track monthly or quarterly payments
- Review business revenue updates
- Assess early repayment or default risk
- Reinvest repayments into new businesses to maximize returns
💡 Example of Returns
If you invest ₹5 lakh in a startup at 5% monthly revenue share with a target return of 1.8×:
- Total expected return = ₹9 lakh
- If monthly revenue share is ₹50,000, payout completes in ~8 months
- Returns vary with revenue performance
⚠️ Risks of Revenue-Based Investment
- Revenue fluctuation risk
- Business operational risk
- Platform or legal risk
- Lower liquidity compared to stocks or FDs
Mitigation: diversify across multiple startups, use verified platforms, and review agreements carefully.
🧾 Taxation on Revenue-Based Investment
- Returns are treated as business income or interest income depending on agreement
- Taxable as per income tax slab
- TDS may apply on revenue share if applicable
- Keep proper documentation for tax filing
Consult a tax advisor for accurate treatment.
🏁 Conclusion
Revenue-Based Investment in India offers flexible, predictable returns for investors while supporting startups and SMEs without diluting equity. By selecting credible platforms, performing due diligence, and diversifying across businesses, investors can earn attractive income with controlled risk.
⚠️ Disclaimer
This blog is for educational purposes only. It does not constitute financial, investment, or legal advice. Revenue-based investments carry revenue, operational, and platform risks. Please consult a certified financial advisor before investing.