Proven growth- and later-stage companies with demonstrated market traction can take advantage of royalty financing, also called revenue-based financing. This type of financing differs from standard debt financing. Lenders provide capital to the business in return for a percentage of ongoing revenues. However, investors do not take an upfront ownership stake in the business, leaving equity ownership unchanged. This is often an attractive and creative non-dilutive way to raise capital for tangible, asset-light, intellectual property-rich companies.

Traditional Royalty Monetization

Royalty monetization allow royalty owners to receive upfront capital in exchange for their expected future royalty payments. These financings can entail either the sale of all or a portion of the royalty stream, or can take the form of a non-recourse loan if the royalty owner wants to maintain the future cash flows after the loan is repaid. In either case, the royalty owner receives liquidity today and reduces or eliminates entirely the commercial risk of the product.

Synthetic Royalties / Revenue Interests

In a synthetic royalty transaction, the lender purchases a new royalty interest in an existing revenue stream from the marketer.

Structured Debt Financings

Structured debt financings are recourse obligations of the issuer. For growth companies with commercialized products, structured debt provides a more flexible source of credit capital than traditional lending institutions will typically offer.

Hybrid Transaction

A hybrid transaction combines elements of a royalty monetization, synthetic royalty and structured debt, tailored to achieve the issuer’s financing goals.