Revenue Royalty Notes

Contributed by Carofin 

Fast-growing private companies in need of capital have an alternative to traditional debt or equity financing — revenue royalty-based financing.

Revenue royalty notes afford the private investor the opportunity to collect current income with a return on investment (ROI) that can be comparable to private equity. Unlike distributions from private equity investments, payments received from Royalty Notes are not tied to the Company’s available operating cash flow or profitability.

High growth issuers appreciate Royalty Notes because the Notes avoid equity dilution. Companies do not issue shares or membership interests. Plus, because royalties come from top-line revenues, issuers avoid fixed-charge demands of traditional private debt financing that are proportional to revenues.

Read the full white paper - Revenue Royalty Notes

*This article is re-posted with permission from Carofin. The original article can be found here:

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Carofin is the modern iteration of the practice which CFS has honed over decades. Its purpose is to leverage technology (via connectivity, data, and process) to empower our community of investors to deploy their capital far more efficiently than ever before. Through Carofin we connect our community of engaged investors with worthy companies, using technology to create vast efficiencies while further empowering the human element of our business.