A New Opportunity for Music Royalty Investments, cash-flow controlled by Esketit via SPV
At Esketit, we are always looking for innovative investment opportunities for our community. Today, we’re thrilled to introduce a new “originator”, Utopia, which offers a chance to invest in advances for artists covered by music royalties.
What Makes This Special?
Utopia, a Swiss music fintech, and its Lyric Financial subsidiary have been at the forefront of advancing cash to artists based on historical income generated through the consumption of their music, such as royalty earnings. These royalties are then collected from platforms like Spotify and iTunes.
The ownership of the royalty streams remains with Utopia, ensuring a direct inflow until the advance is paid off. With their cutting-edge data-driven solutions, Utopia projects future royalty earnings using a blend of traditional methods and machine and deep learning techniques.
Safety and risk control remain our utmost priorities. i2 group, a fintech company based in Switzerland is setting the standard for alternative asset and investment management solutions. They closely supported the establishment of a new Utopia-owned SPV to protect the entire structure.
With this SPV structure in Liechtenstein, retail investors in Europe now have a previously inaccessible opportunity. Proceeds from Spotify and iTunes flow securely into the SPV, directly from the relevant music entity and not via the artist. With the help of i2’s software, i2 and Esketit are able to strictly monitor music royalty payments, ensuring that investors are paid first, and the remaining funds are sent to Utopia/Lyric only once the investors have been paid in full. This has been historically a problem on many P2P platforms and with such a setup it has been solved.
Why Consider This Investment?
Utopia’s model has shown impressive resilience, even during crises, and is uncorrelated with the performance of consumer loan portfolios. Their conservative projection methodologies combined with rigorous artist assessment processes have ensured excellent returns and a very low default rate for over a decade. The proposed investment opportunity comes with a 9% p.a. interest rate, a testament to the confidence in the model.
What is the risk?
The primary risk stems from an incorrect prediction of future royalty payments for artists. This scenario could result in a prolonged duration for investors to recoup their funds. However, any delay in repayment will be mitigated by additional interest payments, ensuring that investors eventually receive their initial investment, the scheduled interest, and compensatory interest for the delay.
Moreover, as cash flows through the SPV are monitored by Esketit and i2 group, it provides an additional safety layer for investors.
In the unlikely event that the songs of artists fail to generate the royalties required to repay the loan within 90 days of its maturity date, the SPV will repurchase the claim from the investor.
Eager to be part of this? Dive into a diversified strategy or choose between auto-invest, or manual investment. The power is in your hands – it’s time to get it with Esketit. Note that institutional investors, including those from i2, will also be making substantial investments here, so the investment opportunity might be sold out quickly.
Investors should be aware that there will be principal repayments throughout the duration of the investment. These repayments will consequently reduce the invested principal amount for investors. Interest is accrued daily, based on the invested amount on each respective day, and is payable either on payment days or upon the maturity of the claim.
It is important to note that the decision regarding the timing and amount of principal repayments made to investors during the investment period rests solely with Utopia. However, SPV is obliged to repurchase the entire principal amount and accrued interest of the investment by the maturity date plus 90 days in arrears.
Those advances will be added to Esketit automated Diversified strategy from 02.01.2024.
Most advances have 1 year repayment period.
There will be 1 day period to pre-fund the loan due to SPV requirements so the interest for the first day will not be paid.
A very tiny number of loans that are bigger in their size will have up to 5 days of period to pre-fund loans for it to be able to transfer claim rights to SPV.