The capital isn't the only thing that changes, so does the governance
structure…
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Board seats, shareholder agreement restructured, and management under
review. A new governance structure is forced upon the business. The team
that built the business now answers to people who recently arrived.
That's not always wrong. Sometimes a company genuinely needs new
blood to get to the next level.
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But often it isn't what a successful Management needs, and it almost never
reflects what the existing equity investors signed up for either, the VCs and
the early backers who took a risk on the business when it was still
unproven.
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With royalty investing, we don't impose a new governance upon the
business.

The team that got the business to EUR 30m in revenue continues building.
The existing shareholders keep the rights they negotiated. Nothing is
fundamentally changed just because new capital arrived.
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We take a share of revenues, and we grow when the business grows.
It does not mean we take a passive position, it means we choose not to
override the judgment of the people who've been closest to the business
since day one. If we do not believe into the existing Management is
excellent and is able to successfully scale the business to the next level,
we do not invest.
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For founders considering their options, and for the investors already around
the table, the governance question is important.
As a royalty investor you are here to support the Management team long
term without disrupting it.

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