This document proposes an angel investment framework that provides: 1) Debt financing to early-stage businesses at a monthly interest rate, with a 1-year moratorium on principal payments and minimum monthly payments of 10% of revenue thereafter. 2) Warrants for the investor to purchase equivalent shares at a pre-agreed valuation to provide equity-style upside potential. 3) Typical debt covenants and shareholder protection rights. The framework is designed to balance risk for investors and entrepreneurs, with investors receiving their preferred return through interest payments and potential upside through warrant conversions if the business succeeds.

2. After [1] year, the company must pay interest due monthly, and part principal, to the extent of at least [10]% of monthly revenue. It might pay more if it can at its discretion. For example, if the investment is 10 lakhs at 2% monthly interest (i.e. 20,000), and the business is making Rs 3 lakhs of revenue per month, it must repay Rs 30,000 a month (Rs 20,000 against interest and Rs 10,000 against principal to start with).

3. This debt will have typical debt covenants and charges on the business.

4. In addition, the Investor gets warrants to purchase an equivalent amount (A) worth of shares of the company, as per share price determined at a pre-agreed valuation level (B). The Investor is entitled to typical shareholder protection rights. The warrants are valid for next [5] years.

6. The company builds some revenue base, but doesn’t break out – The investor gets interest and debt repayment. The warrants may be exercised, or not, depending on Investor choice – but will eventually expire if not exercised.

7. The company breaks out – The Investor makes a preferred return equivalent to the interest rate, and then can capture the upside by converting the warrants (and paying for that equity). The overall effect would be similar to a participating preferred structure in conventional venture termsheets.