The patent holder can be another company, an individual inventor, or some sort of institution, such as a research university.
Royalty funds are a specific type of income trust, used for special-purpose finance, created to hold investments or cash flow in operating companies.
By doing so it avoids double taxation, enabling higher returns on dividends, thus making royalty funds an attractive investment.
Alternatively, the fund can act as a private equity vehicle, extending debt or making loans, in exchange for a proportion of the royalty or securing other assets from the institution as collateral.
But once the product has been sold a proportion of the profits will go to the fund that purchased the royalty (the amount or percentage will vary between companies based on the acquisition/investment terms).