Question

I'm watching shark tank and they keep going on about royalty. They'll say something along the lines of:

I'll give you 500k for 30% equity and 10% royalty.

I don't really understand all this business stuff but what I think is going on it that they're giving 500k upfront for 30% of the company. The royalty I don't really understand. I'm thinking for every dollar made, they want 10 cents. Could someone clarify this for me? Thanks.

Answer 1

Yes, that's essentially what a royalty is.

http://www.investorwords.com/4330/royalty.html

I'm most familiar with the royalties paid to authors of published books. A publisher pays an author a certain percentage of the revenues from the books that are sold.

Answer 2

Thanks a bunch, Ms. Sue.

Answer 3

You're welcome, Lena.