Revenue share (rev-share) is a model where businesses share revenues in exchange for capital or service.
Each partner agrees to invest a certain amount of money or effort for a percentage of the revenue. It’s a great way to reduce risks and ensure everyone is interested in the project’s success.
How does revenue share work?
Startups often use the revenue share model to get outside help without giving up equity. For example, a startup needs marketing but doesn’t have the expertise or the budget.
They partner up with a marketing agency in exchange for revenue share. The agency does the work and invests its money in ads. This way, the startup gets what it needs, and the agency gets paid through the revenue.
Though rev-share sounds simple, it can get complex. So it’s essential to define the terms of the agreement before moving forward.