How We Can Help Each other.
Let’s assume that you have a project or company which, if financed and becomes operational, will generate revenues, due to its success in meeting the needs of customers.
Let’s also assume that we have money to invest for the purpose of obtaining a satisfactory level of increasing income for a known period. We are also conservative and want to take risk commensurate with the anticipated return.
What’s needed to attract me and justify my making money available to you?
First you have to convince me that there is a large demand for your product or service, if successfully developed. Then you have to convince me that with the amount of money raised, you will be able to complete the development of the product or service. Finally, you must convince me that you will be able to sell the product or service to customers, on terms that will allow you to pay me the agreed royalty and to grow the business.
If you have succeeded in convincing me that you will be generating revenues within a reasonable period, I will want you to share with me an agreed percentage of the revenues, this is called a royalty rate. This sharing of revenues is called a revenue royalty and is for an agreed period.
The royalty rate, which is a percentage of your revenues paid to me, may be reduced as the cumulative amount of royalties increases.
Since I am assuming some of the risk that you will be able to create and sell the envisioned product or service, I do not want to take additional risk. Therefore, there are royalty investor protections which you must agree to.
According to terms mutually agreed upon at the time of the transaction, I will allow you to buy back from me the royalty, thus terminating it, for an agreed multiple of my investment cost, less the cumulative amount of royalties already paid to me.
It’s that simple. Since I will not be an owner of the royalty issuing entity, I am not concerned about the company’s profitability or valuation of the revenue generating activity. All I hope for is increasing revenues, which I will share.
The above text is intended to explain the revenue sharing royalty process, and is not intended to indicate that I or British Far East Holdings Ltd. are a source of funding. We advise those interested in the purchase of royalties and in the development of royalty income funds.
Arthur Lipper, Chairman
British Far East Holdings Ltd.
+1 858 793 7100
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