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Some Key Contractual Considerations for Revenue Participation Financing

While a Revenue Participation financing is a substantially different animal than a typical venture capital equity financing involving convertible preferred stock, an investor in a Revenue Participation financing will have several of the same concerns, in terms of monitoring the business and in some circumstances limiting the management prerogatives of the owners of the business.

At a minimum, the Revenue Participation investor will want information, including accounting information, sufficient to ensure that the business is properly recording and distributing revenue.