Royalty Exchange announced an ambitious new fund "Royalty Flow" to purchase the producers share of Eminem's catalog for $11m as well as other follow on royalty streams.
This is a unique offering in that they already have a catalog they are going to purchase and have an all or nothing approach. Meaning, that if they don't raise the amount they need then the fund is void.
If you are an investor, I would highly suggest you read the details of the offering on the SEC website. Initial review has it very vague in some certain areas. I have listed just some of the initial comments I have and compare that to Round Hill's music royalty fund.
1. There is no set dividend policy, so it is unclear when or if they will pay dividends, seems like there in an intent to pay but nothing is laid out. Round Hill has a set quarterly dividend payment.
2. There is no set cost structure on the fund. Round Hill has set management fee so you know exactly what is taken out and why.
3. Royalty Exchange will own over 50% of the dividend paying stock, with Class A and Class B shares, so when you calculate how much you will receive in dividends, you need to make sure you take into account ALL shares.
4. It stated that Royalty Flow can issue even more stock to its executive team which further dilutes the ownership and your percent of the payable dividends.
On a high level, the Royalty Flow fund looks good, especially since it already has what looks a like a good opportunity with Eminem, but the devil is in the details about how you are going to get your money back in dividends.
Round Hill is a much more established fund, with set payment schedules, set fees, and a very clear direction on where they are going with a seasoned management team. The big limitation with Round Hill though is their offering is only for Accredited Investors.
Who knows, maybe Round Hill will look at Royalty Flow and rethink how they raise their next round of funding and take advantage, as Royalty Exchange has done, in utilizing the Regulation A + rules to open this up to all investors.
We can do a deeper dive into the Eminem catalog and the Royalty Flow offering if there is enough interest. If so please email us at email@example.com