Document background
The Royalty Investment Agreement serves as a hybrid financing instrument in the United States, bridging the gap between traditional debt and equity financing. This document is particularly useful when companies seek growth capital without diluting ownership or taking on conventional debt. The agreement typically outlines investment amount, royalty calculation methods, payment schedules, financial reporting requirements, and investor protections. It complies with federal and state securities regulations while providing flexibility in structuring returns based on business performance. Companies often use this type of agreement when they have predictable revenue streams but prefer not to issue equity or qualify for traditional loans.
