Three forces create this window:
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1 - Systemic inertia
Royalties don't naturally fit the regulatory or accounting frameworks of banks and credit
institutions.
The largest capital allocators cannot deploy royalties even if they want to. It simply doesn't fit
their balance sheets and their standard accounting procedures.
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2 - Capability gap
Underwriting royalties requires expertise in customer acquisition and retention, revenue
cohorts, billing systems, true-sale structuring, and royalty pricing. As a royalty investor you
need to evaluate the upside opportunity AND protect from downside risk AND price the
royalty.
Most credit funds don't have these capabilities and cannot easily build them. These
capabilities are specific to royalty investors.

3 - Borrower familiarity
Business owners understand loans and equity, they've used these instruments for decades.
But explaining royalties requires credibility and a proven royalty investment track record.
Very few teams in Europe have that combination.

When I talk about royalties, people often say: "Christian, royalties make a lot of sense. But if
it's so great, why isn't everyone doing it?"

That's exactly the question.
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The answer is these three barriers, there's nothing mysterious about it.
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Therefore, the competition will come from new firms building this from scratch, not from
incumbents changing their existing models.

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