Royalty fund

A royalty fund (also known as royalty funding) is a category of private equity fund that specializes in purchasing consistent revenue streams deriving from the payment of royalties.^{[citation needed]} Royalties are a usage-based payment from one individual or entity to another individual or entity, giving the right to use an asset, product, service or idea.^[1]

One growing subset of this category is the healthcare royalty fund, in which a private equity fund manager purchases a royalty stream paid by a pharmaceutical company to a patent holder. The patent holder can be another company, an individual inventor, or some sort of institution, such as a research university.^[2]