Seeking Capital? A New Option Rears Its Head

Foley Partner Beth Felder authored an article titled “Seeking capital? A new option rears its head” in the April 8, 2010 issue of VentureBeat. Felder discusses the use of royalty-based financing as a way for start up companies to raise capital, stating that royalty-based financing can provide an alternative source of income for some companies and eliminates the need for the investor and entrepreneur to agree on the company’s value at the time of the investment. She adds that royalty-based financing is a loan at its core and may not be ideal for all companies, noting that investors can foreclose on a company’s assets if the company defaults on repayment.