It’s a fair question.
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Royalty-based investing has existed for decades in pharma, mining, entertainment and music.

The model is proven. It produces non-dilutive capital for institutions and companies and
recurring cash flows for investors.

So why is it only now becoming relevant for technology and IP-embedded businesses?
The answer is structural.

It has taken more than 15 years to make recurring, contractual revenue the standard business
model in the IP-based economy. Before, software was licensed once. IP was hard to track.
Revenue was lumpy. That made royalty investing difficult to underwrite.

Today, that has changed.
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We now have:
- Scalable IP-driven business models
- Contractual recurring licensing streams
- Subscription-based software with predictable ARR
- Better data infrastructure and reporting standards

There is more than EUR 1 trillion of yearly recurring revenue in the software industry alone.

In parallel, investors are searching for uncorrelated assets that sit between private equity and
private credit — assets that generate durable cash yield without full equity dilution and
without traditional amortising debt pressure.

Royalties sit precisely in that space.

So why haven’t large banks or established private credit funds dominated this segment
already?

Because institutions optimise around their existing mandate.

Banks optimise for regulatory capital efficiency and standardised lending frameworks.
Private credit funds optimise for secured lending with predictable amortisation and
established covenant models.

Royalties require different underwriting, different modelling, and different operational
infrastructure. They don’t plug neatly into legacy systems.

That doesn’t mean incumbents lack capability. It means the internal friction of adapting is
often greater than the perceived urgency to do so.

Based on ten years of investment track-record, at Althera42 we are building a platform
specifically designed for IP-based royalty and revenue participation investing. We are
combining structuring discipline from private credit, portfolio construction principles from
institutional asset management, and the long-duration thinking required for intangible assets.

Royalty investing is not a marketing label.

It is a natural response to how value is now created in the IP-based economy.
And like every asset class before it, it becomes investable at scale only when the
infrastructure around it matures.

That is the evolution we are building at Althera42. Building What Endures.

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