Royalty financing

Royalty financing is funding repaid out of the revenue of what it funds rather than by fixed instalments. Under the design pillar of Semicon 2.0, notified on 31 August 2026, it is available to companies other than start-ups and small and medium enterprises on a co-investment basis. The company pays a royalty of 5 per cent of the net revenue of the product or technology until the government has recovered 1.5 times what it put in.

The exit is priced. A company that took royalty financing may exit by repaying 1.5 times the support within four years of the last disbursement, or two times the support after that. The same exit applies where the company stops meeting the eligibility or other conditions of the scheme, so a breach of a continuing condition becomes a repayment obligation at a multiple. The terms are stated as at 31 August 2026.