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The Royalty Exchange Secures $2.1 Million in Series A Investment From Grotech Ventures

Jul 15 2013 12:00AM

Marketwire

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RALEIGH, NC -- (Marketwired) -- 07/15/13 -- The Royalty Exchange (TRE), a Raleigh, N.C.-based start-up founded in 2011 that has quickly gained the attention of the entertainment and financial industries, has secured $2.1 million in Series A capital funding from Grotech Ventures, one of the country's leading early investors in high-potential technology companies.

TRE is the world's first online platform for the valuation and sale of music royalties and the income generated from songwriting, producing and publishing. By connecting buyers and sellers with turnkey transactional services in a secure, managed environment, TRE has created a transparent market for royalty owners seeking liquidity, and investors seeking alternative financial assets that are not subject to traditional market dynamics. The web-based auction model is being embraced by the entertainment industry for its focus on establishing premium valuations for music royalties.

"With the worldwide explosion of entertainment properties and distribution platforms, demand for music content is growing exponentially, meaning more royalties paid to rights holders and rising valuations of song and catalog assets," said Sean Peace, CEO and co-founder of The Royalty Exchange. "As an innovator in this space, we feel extremely confident about our ability to maximize value for songwriters and producers while also enabling buyers to make sound, long-term investments."

Peace, a Raleigh native with a background in technology business development, founded TRE together with music industry marketing veteran Wilson Owens of Raleigh, and Reggie Calloway, a five-time Grammy-nominated producer, songwriter and performer. A resident of Los Angeles, Calloway charted hits in the '80s and '90s with the soul/funk ensemble Midnight Star (No Parking on the Dance Floor, Freak-A-Zoid) and the duo Calloway (I Wanna Be Rich). Joining them as a shareholder and advisory board member is Rick French, chairman and CEO of Raleigh-based PR, advertising and digital media agency French/West/Vaughan and a member of the board of trustees of the Rock & Roll Hall of Fame.

Valued worldwide at around $11 billion, music royalties are becoming increasingly desirable as a unique and stable asset class. TRE enables royalty owners to take advantage of this market interest and generate high-multiple valuations far greater than the asset's average annual return. Auctions may feature a single song, a song catalog, or any percentage of a property the owner chooses to sell. Since launching, TRE has managed the auction of royalties connected to artists as diverse as Usher, Whitney Houston, Natalie Cole, and Travis Tritt, as well as songs from classic Disney films and iconic TV shows including Seinfeld, Friends and Law & Order. This platform levels the playing field for rights owners and expands opportunities for investors in music properties.

Beyond music, TRE is developing market opportunities for film, TV, books, solar energy, pharmaceutical, patents, intellectual property, oil/gas and other forms of royalties. The company has been listed as a recommended alternative investment resource by Bob Rice, CEO of Tangent Capital and best-selling author of The Alternative Answer: The Nontraditional Investments That Drive the World's Best-Performing Portfolios.

The capital investment from Washington, D.C.-based Grotech, which has more than $1.3 billion under management and has funded more than 100 companies since 1984, will be used to activate integrated marketing initiatives for TRE, including the expansion of sales teams in New York, Los Angeles and Nashville. French/West/Vaughan is handling creative campaign development and execution for TRE.

"The ability to share music and other copyrighted content online led to a sea change in how we think about managing ownership of these properties and monetizing these assets," said Don Rainey, general partner of Grotech Ventures. "The Royalty Exchange is providing a way for anyone with these assets, from individual songwriters and producers to market investors, to achieve the best return on those assets in a way that is open and transparent. This changes the way royalty assets in many markets will change hands."

Currently housed in HUBRaleigh, a space dedicated to serving early-stage interactive technology companies, TRE plans to relocate in Raleigh as its operation expands in the coming weeks. The announcement of the Grotech funding marks the second venture capital investment of more than $1 million received in the last month by a Raleigh start-up operating out of HUBRaleigh, further enhancing the city's reputation as one of the most dynamic incubators of technology innovation in the U.S.

About The Royalty Exchange
Founded in 2011, The Royalty Exchange (www.theroyaltyexchange.com) is a secure, transparent and efficient online marketplace brokering royalty rights in music, entertainment, publishing, patents, trademarks and other royalty revenue streams as an alternative investment. TRE is owned and operated by veteran royalty rights experts and is advised by global leaders in the legal, financial and technology industries.

About Grotech Ventures
Founded in 1984, Grotech Ventures (www.grotech.com) is a leading early investor in high-potential technology companies. Grotech seeks innovative, early-stage IT companies and continues to invest and add value throughout the growth of its portfolio companies. The firm has a strong combination of industry relationships and deep domain and operational expertise to accelerate growth. Grotech supports early-stage companies through investments starting at $500,000. General partners include Frank Adams, Chuck Cullen, Lawson DeVries, Steve Fredrick, Don Rainey and Joe Zell.



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Source: Marketwire


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