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Dictionary by pitch.dog
Funding instruments & exemptions · Working

Royalty financing

Also called: royalty-based financing

ELI5

Repay capital through a share of sales.

Used in conversation

“The royalty financing reduces near-term dilution but affects gross margin.”

Definition

Financing repaid through royalties linked to sales, revenue or use.

Here “Royalty financing” means: Financing repaid through royalties linked to sales, revenue or use.

Pitch context

You will see “Royalty financing” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches funding instruments & exemptions.

Why it matters: In funding instruments & exemptions, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

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Sources & evidence · 5

Direct term-level sources and supporting source families.