The €40K Question Nobody Asks
Use this model to calculate revenue share payback, monthly payments, and effective cost of capital before you sign any agreement. This tool helps you avoid cashflow traps and negotiate better terms.
You’re sitting across from an investor who’s offering €40,000 for your eco-resort. The term: 20% of monthly profit until they’ve received €100,000 back (2.5× their investment). Then it drops to 10% perpetually.
You nod. It sounds fair. You keep 100% equity. No board seats. No governance. Perfect, right?
But here’s what you don’t know yet:
- How many months until you’re free of that 20% payment?
- What happens if your occupancy hits 50% instead of 70%?
- Is 20% of profit sustainable, or will it choke your cashflow?
- What’s your effective IRR on this deal—and is it better than bank debt?
Most founders sign revenue-share deals blind. They focus on keeping equity and miss the operational reality: you’re paying this investor every single month for 3-5 years.
This article shows you exactly how to calculate your payback timeline, test different scenarios, and spot red flags before you sign anything you’ll regret.
If your pitch deck is finished and investor-ready, you can submit it directly for review. We evaluate completed decks from tourism, travel tech, fintech, and infrastructure founders who are actively raising capital. Contact Upstyle Travel to discuss how our specialized investment approach could support your tourism venture’s growth.
And if you have a vision for an eco-resort, glamping site, or boutique lodge that could attract premium travelers, read this article: Investment Partnership for Eco-Resort Founders: Capital + Expertise for Land-Based Tourism
Why Tourism Founders Need Different Tools Than Tech Startups
If you Google “startup funding calculator,” you’ll find tools built for Silicon Valley. They calculate:
- Exit multiples at 10× revenue
- Dilution across Series A, B, C rounds
- IRR waterfalls for €50M venture funds
None of that applies to you.
You’re not building a unicorn. You’re building a €500K/year eco-resort that might never exit. You don’t need to model five funding rounds—you need to model one deal with one investor over one payback period.
The Problem with VC Calculators
Most startup calculators assume:
- Multiple funding rounds (Seed → Series A → Series B)
- Equity dilution as the primary concern
- Exit-driven returns (acquisition or IPO)
- 5-10 year timelines
- Venture-scale outcomes (10x+ returns)
Your reality is different:
| VC-Backed Tech Startup | Your Tourism Business |
|---|---|
| Raising €2M+ Series A | Raising €20K-€100K one time |
| Exit in 7 years at 10× revenue | No exit plan; build for cashflow |
| Giving up 20-30% equity | Keeping 100% equity (revenue-share) |
| Burn rate: €100K/month | Burn rate: €5K-€15K/month |
| IRR target: 30%+ for VC | IRR target: Stay in business |
What You Actually Need to Model
Revenue-share deals have four core variables:
- Investment Amount (€20K, €40K, €90K)
- Revenue-Share Percentage (15%, 20%, 25% of profit or revenue)
- Cap Multiple (2×, 2.5×, 3× the investment)
- Your Monthly Revenue/Profit (the number that drives everything)
That’s it. Everything else—dilution modeling, pro-rata rights, liquidation preferences—doesn’t apply.
As someone who structures these deals regularly, I’ve seen founders struggle with this. You spend three hours building a 10-tab spreadsheet and feel smart, but you still don’t know: “Can I afford €800/month in payments starting Month 6?”
Simple calculations force honest answers.
What is a Revenue-Share Payback Model?
A revenue-share payback model calculates how long it takes to fully repay an investor based on a percentage of your monthly revenue or profit, until a predetermined cap is reached.
The structure:
- Investor gives you €X
- You pay Y% of monthly revenue (or profit) every month
- Payments continue until investor has received Z× their original investment (the “cap”)
- After cap: Payments either stop completely OR reduce to a smaller perpetual percentage
Example:
- Investment: €40,000
- Revenue-share: 20% of monthly profit
- Cap: €100,000 (2.5× the investment)
- Your profit Month 1: €2,000 → You pay €400 that month
- Your profit Month 24: €5,000 → You pay €1,000 that month
- Total paid after ~42 months: €100,000 → Investor is done (or drops to 10% perpetually)
Why This is Different from Debt
Bank debt:
- Fixed monthly payment (€800/month whether you earn €1,000 or €10,000)
- Personal guarantee (your house is collateral)
- Interest rate (5-12% APR)
- Maturity date (5-7 years)
Revenue-share:
- Variable monthly payment (20% of profit—if profit is €0, payment is €0)
- No personal guarantee (risk is on the business only)
- No “interest rate” (but implied cost via the cap multiple)
- No fixed maturity (could be 2 years or 6 years depending on performance)
Why This is Different from Equity
Equity investment:
- No monthly payments (investor gets paid at exit)
- Permanent dilution (you give up 20% forever)
- Investor has governance rights (board seat, voting)
- No “finish line” (until exit or buyout)
Revenue-share:
- Monthly payments (investor gets paid from operations)
- Zero dilution (you keep 100% equity)
- No governance rights (investor is passive)
- Clear finish line (once cap is hit, you’re either done or payments drop)
Ready to explore a revenue-share partnership?
If you’re considering a revenue-share deal and already have a concrete offer on the table, we can help you evaluate whether the terms make sense for your business.
We structure revenue-share partnerships for tourism ventures raising €20K-€100K, and we know exactly what separates sustainable deals from cashflow killers.
We respond within 24-48 hours with honest feedback—even if we’re not the right partner.
The 5 Inputs That Matter (And the 20 That Don’t)
The beauty of revenue-share calculations is that you only need five core inputs. Everything else is noise.
Input 1: Investment Amount (€)
What it is: The capital you’re receiving from the investor.
Examples:
- €20,000 for 2 bungalows + solar
- €40,000 for 4 bungalows + infrastructure
- €90,000 for product development + 12 months runway (SaaS)
Red flag: If the amount is vague (“€30K-€50K depending on milestones”), you can’t model it. Lock down the number first.
Input 2: Revenue-Share Percentage (%)
What it is: The percentage of revenue (or profit) you’ll pay monthly.
Typical range:
- 10-15%: Low (founder-friendly, but investor needs high confidence)
- 15-20%: Standard (balanced risk-return)
- 20-30%: High (early-stage, higher risk for investor)
Critical distinction: Revenue vs. Profit
Revenue-share (% of gross sales):
- Easier to track (no accounting disputes)
- Investor prefers this (can’t manipulate revenue like you can expenses)
- Example: €10,000 revenue → 15% = €1,500 paid
Profit-share (% of net profit):
- Better for founder (protects cashflow in tough months)
- Requires clear definition of “profit” (EBITDA? Net income? Before or after your salary?)
- Example: €10,000 revenue, €6,000 costs = €4,000 profit → 20% = €800 paid
Most tourism deals use profit-share (more common, founder-friendly)
⚠️ Important: Define “profit” clearly in your agreement. Is it EBITDA, Net Income, or something else? Add this to your contract to avoid disputes.
Input 3: Cap Multiple (× Investment)
What it is: The total amount the investor will receive before payments stop (or reduce).
Typical range:
- 1.5×: Very low (only for de-risked businesses with proven revenue)
- 2.0-2.5×: Standard (balances founder cashflow vs. investor return)
- 3.0×+: High (early-stage, high risk, founder keeps equity as trade-off)
Example:
- Investment: €40,000
- Cap: 2.5× = €100,000 total paid out
- After €100,000 paid: Investor is done (or payments drop to 5-10% perpetually)
What happens after cap?
Three options:
- Payments end completely (cleanest, founder loves this)
- Convert to small perpetual % (e.g., 20% → 10% forever)
- Convert to equity stake (hybrid model—e.g., 7% equity after cap hit)
⚠️ Important: Standard range is 2-2.5×. Above 3× is aggressive unless you’re pre-revenue and high-risk.
Input 4: Monthly Profit Projection (€)
What it is: Your realistic estimate of monthly profit after all operating expenses.
This is the number that drives everything.
For an eco-resort:
- Revenue: 8 nights × €150 ADR × 30 days × 60% occupancy = €21,600/month
- Costs: Staff (€4K), food (€3K), utilities (€1K), maintenance (€1K) = €9,000/month
- Profit: €12,600/month
If you’re paying 20% of profit → €2,520/month to investor
For a SaaS platform:
- MRR: €15,000
- Costs: Development (€3K), marketing (€4K), support (€2K) = €9,000/month
- Profit: €6,000/month
If you’re paying 15% of profit → €900/month to investor
Red flags:
- Wildly optimistic growth (Month 1: €2K profit, Month 12: €20K profit—really?)
- Ignoring seasonality (tourism is seasonal; model low months too)
- Forgetting founder salary (if you need to pay yourself, that’s a cost)
⚠️ Important: Model conservatively. Use 60% of your best-case scenario. Tourism is seasonal—show high and low season separately.
Input 5: Growth Rate (Optional)
What it is: How much your monthly profit grows year-over-year.
Typical range:
- 0%: Flat (you’re already profitable and stable)
- 10-20%: Modest growth (adding 1-2 bungalows/year, improving occupancy)
- 30-50%: Aggressive growth (scaling fast, adding staff, expanding)
Why it matters:
Faster growth = faster payback. If your profit doubles from €3K/month to €6K/month, your payments double too, and you hit the cap faster.
⚠️ Important: Growth assumptions change everything. Model 0% growth as your baseline (worst case), then test upside scenarios.
What You DON’T Need to Input
These are irrelevant for revenue-share deals:
❌ Equity dilution (you’re not giving up equity)
❌ Liquidation preference (no exit event)
❌ Board seats (no governance)
❌ Pro-rata rights (no follow-on rounds)
❌ Valuation (pre-money/post-money doesn’t apply)
❌ IRR waterfall (you’re not a VC fund)
If someone asks you to model these, you’re in the wrong conversation.
Real Example: €40K Investment, 20% Revenue-Share, 2.5× Cap
This is a structure I’ve used in actual deals. Let’s model it step-by-step.
The Deal Terms
Investment Amount: €40,000
Use of Funds: Build 2 eco-bungalows + solar system + website + working capital
Revenue-Share: 20% of monthly profit
Cap: €100,000 (2.5× the investment)
After Cap: Payments drop to 10% of profit perpetually (no sunset clause)
Founder Profile:
- You own land in Mozambique (customary rights, long-term)
- You’ll operate the resort yourself (no outside manager)
- Target market: South African tourists + European backpackers
- Pricing: €120-€180/night depending on season
Step 1: Project Your Monthly Profit
Assumptions:
- 2 bungalows
- 60 nights/month available per bungalow (assume some downtime) = 120 total nights available
- 60% average occupancy across the year = 72 nights sold/month
- Average daily rate (ADR): €150
- Monthly revenue: 72 nights × €150 = €10,800/month
Costs:
- Staff (cook, cleaner, caretaker): €2,000/month
- Food & beverage (cost of meals for guests): €1,500/month
- Utilities (solar maintenance, water, internet): €500/month
- Maintenance & supplies: €800/month
- Total costs: €4,800/month
Monthly profit: €10,800 – €4,800 = €6,000/month
Step 2: Calculate Monthly Payment to Investor
Revenue-share: 20% of €6,000 profit = €1,200/month
This is what you’ll pay the investor every month during the payback period.
Cashflow check:
- Profit: €6,000
- Paid to investor: €1,200
- Left for you: €4,800/month
Can you survive on €4,800/month?
- Yes, if you live modestly and reinvest minimally.
- No, if you need to hire more staff or expand.
Red flag: If the payment takes >40% of profit, you’re choking your cashflow. Renegotiate the % or the cap.
Step 3: Calculate Months to Hit Cap
Cap: €100,000 (2.5× the €40K investment)
Monthly payment: €1,200
Months to cap: €100,000 ÷ €1,200 = 83 months (6.9 years)
Wait—that’s a long time.
But here’s where growth changes everything.
Scenario A: Flat Growth (0%)
- Profit stays €6,000/month for 6.9 years
- Payment stays €1,200/month
- Timeline: 83 months
Scenario B: Modest Growth (15% annual profit growth)
| Year | Avg Monthly Profit | Monthly Payment | Annual Total Paid |
|---|---|---|---|
| Year 1 | €6,000 | €1,200 | €14,400 |
| Year 2 | €6,900 | €1,380 | €16,560 |
| Year 3 | €7,935 | €1,587 | €19,044 |
| Year 4 | €9,125 | €1,825 | €21,900 |
| Year 5 | €10,494 | €2,099 | €25,188 |
| Year 6 (partial) | – | – | €3,908 |
Total paid by Month 63: €100,000
Timeline with 15% growth: 63 months (5.25 years)
Scenario C: Aggressive Growth (30% annual)
| Year | Annual Total Paid | Cumulative |
|---|---|---|
| Year 1 | €14,400 | €14,400 |
| Year 2 | €18,720 | €33,120 |
| Year 3 | €24,336 | €57,456 |
| Year 4 | €31,637 | €89,093 |
| Year 5 (partial) | €10,907 | €100,000 |
Timeline with 30% growth: 51 months (4.25 years)
Step 4: Calculate Effective IRR
IRR (Internal Rate of Return) is the “cost of capital”—what you’re effectively “paying” for this deal.
Scenario B (15% growth, 63 months to cap):
- Investor puts in: €40,000 (Month 0)
- Investor receives: €100,000 (over 63 months)
- IRR: ~22% per year
For comparison:
- Bank debt: 7-12% APR
- Credit card: 18-24% APR
- Equity (zero monthly cost, but you give up 20% forever)
Is 22% IRR expensive?
For a frontier market eco-resort with no collateral, no track record, and high risk? No, it’s fair.
You’re getting €40K with:
- Zero dilution (you keep 100% ownership)
- No personal guarantee (your house isn’t at risk)
- Flexible payments (if profit drops to €2K, you only pay €400/month)
That’s worth 22% IRR.
Step 5: Model the “After Cap” Phase
After 63 months, investor has received €100,000 (the 2.5× cap).
What happens next?
Option A: Payments end completely
- You now keep 100% of profit
- If profit is €10,000/month (Year 5), you keep all €10,000
- Investor is done
Option B: Payments drop to 10% perpetually
- You pay 10% of profit forever (no sunset)
- If profit is €10,000/month → You pay €1,000/month forever
- Investor gets ongoing income stream
- You keep 90% (€9,000/month)
Which is better for you?
Depends on your long-term plans:
- If you plan to exit or sell in Year 7-10 → Option A (clean break)
- If you plan to operate forever (family business) → Option B is fine (10% is manageable)
In this example, the deal uses Option B (10% perpetual).
Summary: €40K Deal Outcomes
| Scenario | Annual Growth | Months to Cap | Total Paid | Effective IRR | Payment After Cap |
|---|---|---|---|---|---|
| Flat | 0% | 83 months | €100,000 | 14% | 10% perpetual |
| Modest | 15% | 63 months | €100,000 | 22% | 10% perpetual |
| Aggressive | 30% | 51 months | €100,000 | 31% | 10% perpetual |
Key takeaway: Growth is your best friend in revenue-share deals. The faster you scale profit, the faster you’re free (or paying reduced %).
How to Calculate Your Own Payback Timeline
Since there’s no downloadable calculator, here’s the exact formula you need:
Basic Calculation
Months to Cap = Total Cap Amount ÷ (Monthly Profit × Revenue-Share %)
Example:
- Cap: €100,000
- Monthly Profit: €6,000
- Revenue-Share: 20%
- Monthly Payment: €6,000 × 0.20 = €1,200
- Months to Cap: €100,000 ÷ €1,200 = 83 months
With Annual Growth
If your profit grows each year, you need to calculate year-by-year:
Year 1 Total Paid:
Monthly Profit × Revenue-Share % × 12 months
Year 2 Total Paid:
(Monthly Profit × (1 + Growth Rate)) × Revenue-Share % × 12 months
Continue until cumulative payments reach the cap.
Example with 15% annual growth:
- Year 1: €6,000 × 0.20 × 12 = €14,400 paid (Total: €14,400)
- Year 2: €6,900 × 0.20 × 12 = €16,560 paid (Total: €30,960)
- Year 3: €7,935 × 0.20 × 12 = €19,044 paid (Total: €49,004)
- Year 4: €9,125 × 0.20 × 12 = €21,900 paid (Total: €71,904)
- Year 5: €10,494 × 0.20 × 12 = €25,188 paid (Total: €97,092)
- Year 6: (€100,000 – €97,092) / (€12,068 × 0.20) = 1.2 months
- Total: 61.2 months (~5 years)
Calculate Your Effective IRR
Simple IRR approximation:
IRR ≈ (Total Returned / Investment)^(1 / Years) – 1
Example:
- Investment: €40,000
- Total Returned: €100,000
- Years to Cap: 5.25 years
- IRR ≈ (€100,000 / €40,000)^(1/5.25) – 1
- IRR ≈ (2.5)^0.19 – 1
- IRR ≈ 19-22%
For more precise IRR calculations, use Excel’s IRR function or Google “IRR calculator online.”
Red Flags in Your Numbers: Built-In Sanity Checks
Every input needs a reality check. Here are the most critical warnings:
Red Flag #1: Payment Takes >40% of Monthly Profit
Example:
- Monthly profit: €5,000
- Revenue-share: 25% = €1,250/month
- Remaining cashflow: €3,750/month
⚠️ Warning: Payment is 25% of profit. If profit drops to €3K, you’ll have only €2,250 left. Can you survive low season?
Why this matters:
Tourism is seasonal. If your high-season profit is €8,000 but low-season is €2,000, and you’re paying 25% (€500 in low season), you might have only €1,500/month to cover fixed costs.
Fix:
- Renegotiate to 15-20% instead of 25%
- OR build a “payment floor” (minimum €300/month even if profit is low)
- OR negotiate a “payment holiday” in Months 1-3 while you ramp up
Red Flag #2: Cap Multiple Above 3×
Example:
- Investment: €50,000
- Cap: 3.5× = €175,000 total payback
⚠️ Warning: 3.5× cap is aggressive. Standard range is 2-2.5×. At 3.5×, your IRR to investor is 35%+. Is that justified?
Why this matters:
A 3.5× cap means you’re paying back €175K on a €50K investment. That’s an expensive deal.
When it’s justified:
- You’re pre-revenue (high risk for investor)
- Investor is providing significant operational support (not just capital)
- You tried banks and got rejected (this is your only option)
When it’s NOT justified:
- You already have revenue (lower risk)
- Investor is passive (no operational value-add)
- You could get bank debt at 10% APR instead
Fix:
- Push back: “2.5× is standard. Why are you asking for 3.5×?”
- OR negotiate down to 3× and add a sunset clause (“After 5 years, even if cap not hit, payments stop”)
Red Flag #3: Revenue-Share on Gross Revenue (Not Profit)
Example:
- Monthly revenue: €20,000
- Costs: €15,000
- Profit: €5,000
- Investor wants: 15% of revenue (not profit) = €3,000/month
🚨 RED FLAG: You’re paying 15% of revenue, which is 60% of your profit. This will kill your cashflow. Negotiate % of profit instead.
Why this matters:
If your margin is 25% (profit = 25% of revenue), then 15% of revenue = 60% of profit.
Example:
- Revenue: €20,000
- Profit: €5,000 (25% margin)
- Payment: 15% of revenue = €3,000
- You’re left with €2,000 (40% of your profit goes to investor)
Fix:
- Switch to profit-share: “15% of profit” = €750/month (much more sustainable)
- If investor insists on revenue-share, negotiate down to 5-8% of revenue max
Red Flag #4: No Definition of “Profit”
Example:
- Agreement says: “20% of monthly profit”
- But doesn’t define: EBITDA? Net income? Before or after your salary?
⚠️ Warning: Define ‘profit’ clearly. Is it EBITDA, Net Income, or something else? Add this to your agreement.
Why this matters:
You might think profit = “What’s left after I pay bills.”
Investor might think profit = “Revenue minus only direct costs (no salaries, no marketing).”
Without a clear definition, you’ll fight every month.
Fix:
Add to your agreement:
“Profit is defined as: Gross Revenue minus Operating Expenses (including founder salary up to €X/month), as reported in monthly P&L statements prepared in accordance with [local accounting standards].”
Red Flag #5: Ignoring Seasonality
Example:
- Your model shows: €6,000/month profit (flat, every month)
- Reality: €10,000/month (high season, 6 months), €2,000/month (low season, 6 months)
⚠️ Warning: Tourism is seasonal. Model high and low season separately. If low-season profit is €2K and you pay 20% (€400), can you cover fixed costs with the remaining €1,600?
Why this matters:
If you model flat profit and ignore seasonality, you’ll sign a deal that works “on average” but kills you in low season.
Fix:
- Model two scenarios: High season and low season
- Show investor: “I can pay 20% in high season (€2,000/month), but only 10% in low season (€200/month)”
- Negotiate a variable rate: “20% in Months 1-6 (high season), 10% in Months 7-12 (low season)”
Red Flag #6: No Payment Cap Timeline
Example:
- Agreement says: “20% of profit until 2.5× paid back”
- But no maximum timeline
⚠️ Warning: Add a time cap (e.g., ‘Payments end after 7 years, regardless of cap status’). Protects you if business underperforms.
Why this matters:
If you project 5 years to hit cap, but reality is 10 years, you’re stuck paying for a decade.
Fix:
Add a “time cap” clause:
“Payments shall continue until the earlier of: (a) €100,000 paid in total, or (b) 7 years from first payment.”
This gives you a maximum timeline.
When Revenue-Share DOESN’T Make Sense
Revenue-share is powerful, but it’s not universal. Here’s when to walk away:
Case 1: You’re Pre-Revenue with No Clear Unit Economics
Example:
You have land and a dream, but no revenue projections, no comparable properties, no proof that tourists will come.
Why revenue-share fails:
The investor has no way to model payback. They’ll either:
- Demand an insanely high cap (4×+) to compensate for risk
- OR demand equity instead
Better structure:
- Equity partnership (50/50 with investor who adds operational value)
- OR wait until you have at least pilot revenue before seeking revenue-share
Case 2: Your Margins Are Too Low (<30%)
Example:
- Revenue: €20,000/month
- Costs: €17,000/month
- Profit: €3,000/month (15% margin)
- Revenue-share: 20% of profit = €600/month
Why it fails:
You can’t afford to give up 20% (€600) when you’re only making €3,000. That leaves you €2,400/month—probably not enough to survive and reinvest.
Fix:
- Improve margins first (raise prices, cut costs)
- OR negotiate a lower % (10% instead of 20%)
- OR consider equity (no monthly payment pressure)
Case 3: You Need Multiple Rounds of Capital
Example:
You need €50K now, then €100K in 18 months, then €200K in 36 months.
Why revenue-share fails:
You’ll stack multiple revenue-share agreements, each taking a % of profit. By Round 3, you’re paying 40-60% of profit to investors.
Better structure:
- Equity funding (dilution happens once per round, not continuous payments)
- OR build business to profitability on first round before seeking Round 2
Case 4: Investor Wants Governance (Board Seat, Veto Rights)
Example:
Investor says: “I’ll do revenue-share, but I want a board seat and veto on major decisions.”
Why this is wrong:
Revenue-share = passive capital. No governance. If they want control, they should take equity.
Fix:
“Revenue-share means you’re a lender, not an owner. If you want governance, let’s talk about an equity deal instead.”
Need help evaluating your revenue-share terms?
We structure revenue-share deals for tourism ventures and know exactly what separates fair terms from exploitative ones.
If you’re being offered a revenue-share deal and want a second opinion on the terms, we provide honest feedback—even if we’re not the right partner for your business.
What we can help with:
- Evaluating whether your % and cap multiple are market-standard
- Calculating your realistic payback timeline with seasonality
- Spotting red flags in the legal language
- Suggesting alternative structures that might work better
This is not a sales pitch—it’s a reality check.
We respond within 24-48 hours.
Frequently Asked Questions
Q: What’s the difference between revenue-share and profit-share?
Revenue-share: You pay X% of gross sales (before expenses).
Profit-share: You pay X% of net profit (after expenses).
Example:
- Revenue: €10,000
- Expenses: €6,000
- Profit: €4,000
15% revenue-share = €1,500 paid
15% profit-share = €600 paid
Most tourism deals use profit-share (better for founder cashflow).
Q: Is revenue-share debt or equity?
Neither.
It’s a hybrid structure:
- Like debt: You make regular payments
- Unlike debt: Payments are variable (based on performance), no personal guarantee
- Like equity: Investor participates in upside (higher profit = higher payments)
- Unlike equity: No dilution, no governance, clear finish line
Legally, it’s usually structured as a “profit participation agreement” or “revenue-sharing loan.”
Q: What happens if I can’t make a payment?
Depends on your agreement.
Good agreement:
“If monthly profit is below €X, payment is reduced proportionally or deferred to next month.”
Bad agreement:
“Missed payments accrue interest and must be paid within 30 days.”
Make sure your agreement is flexible:
“If monthly profit is less than €1,000, Investor’s payment for that month is reduced to 10% of profit (instead of 20%). No penalties apply.”
Q: Can I pay off the cap early?
Usually, yes (but check your agreement).
If you have a great year and want to pay off the remaining cap in one lump sum, most investors will accept it (they get their return faster).
Example:
- Cap remaining: €30,000
- You have extra cash from a strong season
- You offer: “I’ll pay you €30,000 now to close this out.”
Most investors say yes (they get full return immediately, no waiting).
Q: What’s a “good” IRR for the investor?
Depends on risk:
| Risk Level | Investor IRR Target |
|---|---|
| Low (profitable business, proven model) | 15-20% |
| Medium (early revenue, clear unit economics) | 20-30% |
| High (pre-revenue, frontier market) | 30-40%+ |
Your €40K example at 22% IRR = fair for a medium-risk eco-resort.
Q: Should I do revenue-share or equity?
Revenue-share if:
- You have revenue (or will within 12 months)
- You want to keep 100% equity
- You’re building a lifestyle business (no exit plan)
- You can afford monthly payments
Equity if:
- You’re pre-revenue (18+ months to first revenue)
- You need multiple rounds of capital
- You’re building for exit (10x+ scale potential)
- You want strategic investor (not just capital)
Q: Can I combine revenue-share and equity?
Yes—it’s called a hybrid structure.
Example:
- €60K investment
- 20% profit-share until €120K paid (2× cap)
- THEN converts to 7% equity stake
- Investor gets capital back + long-term equity participation
This works well for businesses with near-term revenue + long-term upside (e.g., SaaS platforms, marketplaces).
Conclusion: Know Your Numbers Before You Sign
Most founders sign revenue-share deals based on gut feel. “20% sounds fair.” “2.5× seems reasonable.” “I can probably afford €800/month.”
Probably isn’t good enough.
You’re about to commit to monthly payments for 3-7 years. You need to know:
- Exactly how much you’ll pay each month
- Exactly when you’ll be done paying
- Exactly what happens if revenue drops 30%
That’s what these calculations give you. They turn vague terms into concrete timelines, so you can make an informed decision—not a hopeful guess.
The Three Takeaways
1. Revenue-share is not “free money”
You’re paying every month. Model your cashflow carefully.
2. Growth is your best friend
The faster your profit grows, the faster you hit the cap. A 15% annual growth rate cuts your payback timeline by 25%.
3. Negotiate the details
Most founders accept the first offer. Don’t. Calculate scenarios, show the math, and push back on aggressive terms (high %, high cap, revenue instead of profit).
What to Do Next
- Use the formulas above to calculate your own timeline
- Test scenarios (growth rates, cap multiples, payment %s)
- Document the outputs and send to your investor: “Here’s what your terms look like. Let’s discuss.”
Final Thought
The best deals are the ones where both sides understand the math before they sign.
These calculations give you that clarity. Use them. And if the numbers don’t work—if the payments choke your cashflow, if the cap is too high, if the timeline stretches to infinity—walk away.
Better to wait for the right deal than to sign the wrong one.
Ready to submit your pitch deck?
If you have developed a high-potential tourism startup and you’re ready to scale with a partner who brings capital, deep industry expertise, and a global network, let’s talk.
We don’t need an intro call to explain the industry to us. We understand the travel ecosystem from API infrastructure to remote hospitality operations. If your pitch deck is finished and your vision is clear, we provide a streamlined path to investment and strategic partnership.
We respond to every credible submission within 24-48 hours. You will talk to real investors who understand travel tech, seasonal unit economics, and what it actually takes to scale a tourism business in today’s market.
Your venture could be our next investment success story.
About Upstyle Travel
Upstyle Travel is the hospitality investment arm of Upstyle Consulting GmbH, based in Vienna, Austria. Led by Dr. Conrad Pramböck, we specialize in investing in and partnering with travel technology founders and tourism innovators worldwide.
Unlike generalist VCs focused purely on financial metrics, we are industry insiders. We’ve successfully navigated the complexities of global travel distribution, remote construction, and the unique challenges of the tourism value chain.
We bring two decades of travel and hospitality expertise—combined with a genuine appreciation for founders who are bold enough to disrupt a traditional industry.
Our investment and advisory focus includes:
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Travel SaaS & Infrastructure: Solving technical bottlenecks in the industry.
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Niche Marketplaces: Connecting travelers with specialized experiences.
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Hospitality Tech: Innovations in guest experience and operational efficiency.
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Sustainable Travel Tech: ESG-driven solutions for the future of tourism.
Every investment we make benefits from our accumulated wisdom and our network of 500+ industry stakeholders. Your venture inherits this unfair advantage, turning your vision into a market-leading reality.
Contact Information:
Upstyle Travel
Wipplingerstrasse 13/9
1010 Vienna, Austria
Dr. Conrad Pramböck
Tel: +43 676 534 12 57
Email: cp@upstyle-consulting.com
WhatsApp: Start Conversation