Table of Contents
innovative solution to creating risk capital for business enterprises
of all types struggle to obtain risk capital which would not lead to excessive
debt or compromise effective management control. The need for risk capital to
start or grow an enterprise is compelling but ironically the conditionalities
typically attached to conventional risk capital are often debilitating and
potentially fatal. A lack of risk capital on suitable terms, on the other hand,
frustrates entrepreneurial ambition and checks economic growth. This book
proposes a fresh, innovative solution to the search for risk capital that should
suit enterprises and investors alike.
The book shows how the dual functions of
equity — risk capital and ownership capital — can be separated. This
innovation can pave the way for raising risk finance without affecting the
ownership or control of a company, and without excessive traditional borrowing.
The model for achieving this is royalty funding, a system grounded in the proven
and familiar practice of licensing. Under this system enterprises pay for the
invested risk capital by means of royalties on the sales revenues they achieve,
rather than become debtors or partners to those who provide the funds. Royalty funding will benefit both ï¿½ those who own and manage
enterprises and also the investors who receive a contractually committed return
whilst maintaining the security of asset ownership in the event of a failure of
The book also explains how royalty funding could be put into
practice for a range of different enterprises; from small and medium-size firms
to major companies, providers of public services and other diverse enterprises.
Offering a compelling alternative that complements current financial models,
this book offers an innovative solution for creating risk capital. It is, thus,
an essential read for anyone involved in establishing, running or investing in
successful enterprises; for entrepreneurs, business advisers and consultants,
finance professionals, venture capitalists and angel investors, as well as
policymakers and academics.