The statute excludes investor contractual repayment rights even when contingent on enterprise success, such as sufficient cash flow. The condition does not by itself cure the right.
Review the actual repayment entitlement
Identify whether the investor can require redemption or repayment under the agreement. Do not replace that inquiry with a general assertion that every investment remains risky because the business might fail. Redemption language rarely appears as a single clause; it can be scattered across a subscription agreement, an operating agreement and a side letter, each drafted by different counsel at different times.
Read every document governing the enterprise rather than relying on a marketing summary, and note whether redemption is triggered at the investor's election or only at the enterprise's discretion. A right framed as a priority return or preferred distribution can function as a disguised repayment entitlement even without using the word redemption. Ask whether the waterfall gives the investor a fixed position ahead of other capital regardless of enterprise performance, since a fixed position of that kind is not consistent with capital genuinely at risk.
Amendments matter too: a later side letter can grant an investor rights the original subscription agreement withheld, so review the complete, currently effective set of documents rather than an early draft. Request written confirmation from the enterprise or its counsel describing exactly what happens to invested capital if the enterprise underperforms, rather than accepting a verbal assurance that the investment is safe.