Royalty Exchange

Last updated
Royalty Exchange
Founded2011
Website www.royaltyexchange.com

Royalty Exchange is an American company that operates an online platform for buying and selling royalty assets of any type, mostly music, where royalty owners can sell their future payments to investors as alternative assets. The company hosts a centralized marketplace and online auction platform that connects a community of over 22,500+ investors with owners of royalty-based assets.

Contents

All types of assets can be monetized and invested in including music royalties, film royalties, and tax credits, patent and intellectual property royalties, trade secret royalties, renewable energy land leases, technology licensing royalties, book publishing royalties, franchise royalties, copyright royalties and agriculture royalties. [1] [2]

History

Royalty Exchange was founded in 2011 in Raleigh, North Carolina. [1] The founding team was led by Sean Peace (tech entrepreneur and CEO), Reggie Calloway (five-time Grammy-nominated songwriter/artist) and Wilson Owens (former band manager and digital marketing expert).

In October 2015, the company was acquired [3] by a group of private investors, including new CEO Matthew Smith, and President & CFO Jeff Schneider. Additional investors include artist manager and concert promoter Bill Silva of Bill Silva Entertainment, as well as a group of alternative investment experts. The company is now based in Denver, CO.

In October 2017, Royalty Exchange became [4] a member company of Techstars Music Accelerator.

On March 3, 2021, digital distributor Vydia announced that it would use Royalty Exchange's online marketplace to fund advances for its clients. [5] On March 11, 2021, Anthony Martini was named CEO of Royalty Exchange. Former CEO Matthew Smith will remain with the company as a chairman. [6]

Notable auctions

Royalty Flow

In September 2017, Royalty Exchange created a company called Royalty Flow, designed to acquire and hold royalty streams "of the world's biggest artists," starting with the Bass Brothers' production share of Eminem's 1999-2013 catalog. [23] Royalty Flow filed with the SEC under Regulation A+ to raise between $11 million and $50 million to acquire the Eminem catalog from the producers who discovered and developed him—FBT Productions—as well as future catalogs. Those buying shares in Royalty Flow would have the right to collect dividends based on the performance of the Eminem catalog and any other catalogs acquired over time. The company intends to later list directly to the NASDAQ. [24]

Royalty Flow was officially launched on November 27, 2017. [25] On April 9, 2018, Royalty Exchange CEO Matt Smith canceled the IPO. He confirmed that the Nasdaq Stock Market revoked the company's conditional approval for listing on the exchange. [26]

The Bass Brothers' stake has since been acquired by Shamrock Holdings. [27]

Private Syndicates

In June 2018, Royalty Exchange began offering Private Syndicate investments. Under Private Syndicates, Royalty Exchange creates Special Purpose Vehicles (SPV) designed to hold music catalogs. Accredited investors then buy shares of that entity, which grants them a proportional share of the royalty income it generates. Unlike auctions, there is no bidding. Investors can buy units in the Private Syndicate at fixed, known prices, and take the position size of their choice in each.

The first Private Syndicate closed was for the co-publishing share of Cage The Elephant's catalog.

The second Private Syndicate, which was announced in September 2018, involved the royalties to British rock band Dire Straits. This catalogue had earned nearly $300,000 in the twelve months before the auction. [28]

Multi-unit auctions

On August 7, 2014, Royalty Exchange had its multi-unit auction, a type of auction where the asset is securitized or divided into multiple units allowing for numerous buyers to bid on and win small or large amounts of the asset. The auction consisted of producer royalties for 11 tracks recorded and performed by the alternative rock band, 3 Doors Down. [29]

Acquisition and funding

In October 2015, the business was acquired and relocated to Denver, Colorado. As part of the acquisition, a new marketing/sales, legal, and operations team were put in place. [30] In June 2017, the company raised $6.4 million in funding through a convertible note offering, more than double the $3 million it initially sought. The new funds were earmarked for new hires, new technology, and new product development. [31]

Further reading

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References

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  23. Fans Will Soon Be Able to Invest In Royalties From Eminem's Catalog
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  27. "Shamrock Capital Acquires Stargate Publishing Catalog, Including Katy Perry, Rihanna & Beyonce Hits". Billboard . 16 October 2018.
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