Use of Proceeds
Definition
Use of Proceeds is the offering-document table or narrative showing how investor capital will be allocated. It can include asset acquisition, sourcing fees, broker-dealer commissions, offering expenses, issuer working capital, debt repayment, reserves, or related-party payments.
Why it matters
Use of Proceeds is where the headline investment amount becomes an economic allocation. A buyer may assume every dollar funds the underlying royalty asset, but the filing may show meaningful portions going to sourcing fees, broker-dealer commissions, issuer debt repayment, or other corporate purposes.
Common misconceptions
- •Use of Proceeds is not just accounting detail; it changes the buyer's effective exposure to the underlying asset.
- •Debt repayment can be fully disclosed and still matter economically because it funds the issuer balance sheet rather than new asset exposure.
- •Comparing offerings by headline size alone can be misleading if the proceeds allocations differ.
Technical details
Royalty-offering lens
For SongShare-style offerings, compare gross proceeds with the portion allocated to royalty-rights exposure after sourcing fees, broker-dealer commissions, offering expenses, and any debt repayment.
Investor question
The practical question is: of each dollar invested, how much is economically tied to the underlying royalty asset and how much funds the wrapper, the distributor, or the issuer?