Shared Earnings Agreement between Fund & Company
Overview of this form
A Shared Earnings Agreement (SEA) is a legal document between a business and an investor, which outlines the terms of an upfront investment in a startup or small business. This agreement entitles the investor to a percentage of the companyâs future earnings, distinguishing it from traditional equity structures such as convertible notes or SAFE agreements. Unlike debt, it does not impose a fixed repayment schedule or require personal guarantees, making it a flexible financing alternative.
What’s included in this form
- Amount of Investment: Specifies the total investment amount made by the investor.
- Shared Earnings: Details how the company will distribute earnings to the investor quarterly.
- The Percentage: Describes the portion of earnings that the investor will receive.
- Net Income: Defined in accordance with Generally Accepted Accounting Principles (GAAP).
- Equity Conversion: Outlines the investor's right to convert their share into equity based on specified terms.
- Confidentiality: Ensures the terms of the agreement are kept private.
When this form is needed
This Shared Earnings Agreement is useful for startups and small businesses seeking investment without issuing equity. It is appropriate when businesses want to maintain control while providing investors with a share of future earnings, often used in early-stage financing or when traditional loan structures are not suitable.
Who can use this document
- Startups looking for investment from individual or institutional investors.
- Small businesses that prefer not to dilute ownership through equity issuance.
- Investors who want a structured way to earn from a businessâs future revenues but donât want to take on debt.
- Businesses and investors in a trial or pilot phase considering future funding options.
Completing this form step by step
- Identify the parties: Enter the names of the Company and the Investor.
- Specify the investment details: Fill in the amount of investment.
- Enter the earnings percentage: Indicate the percentage of earnings the investor will receive.
- Complete the Shared Earnings Cap: Define the limit to the total amount of earnings payable to the investor.
- Include company and investor signatures: Ensure both parties sign and date the agreement to validate it.
Is notarization required?
This form does not typically require notarization unless specified by local law. However, it is recommended to consult legal counsel to ensure compliance with applicable laws in your jurisdiction.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Mistakes to watch out for
- Failing to specify the exact percentage of earnings to be shared.
- Omitting details on the calculation of net income or founder earnings.
- Not signing the agreement, which can render it unenforceable.
- Confusing the terms with traditional equity agreements.
- Neglecting to review local laws and regulations related to investments.
Advantages of online completion
- Convenience: Download and complete the form at your convenience.
- Editability: Easily customize the template to meet your specific needs.
- Reliability: Forms are drafted by licensed attorneys to ensure legal compliance.
- Fast access: Instantly download forms without wait times.
