User:Andrewclapp/sandbox

Note to Reviewer: The following is a draft still being worked on and is not ready for review or uploading onto Wikipedia. Note to reviewer: This submission is modeled on a similar entry published in Wikipedia for Highland Capital Partners, a venture capital fund with similar characteristics but not doing royalty financing which is unique to this fund.

Arctaris Income Fund is a Royalty Capital firm that focuses provides mezzanine loans to growing mid-sized privately companies and small publicly held companies in a wide variety of industries through North America. The firm's partners include: Andrew Clapp, Jeff Emig, Jonathan Tower and Rick Waldo.

Founded in 2009, the company is headquartered in Waltham, Massachusetts, and has an office in Detroit, Michigan. In addition the firm provides loans to companies within underserved markets such as Northern New England, the Midwest, and within lower middle income regions.

The firm is one of the extremely few firms in the United States that focuses on making Royalty Loans that do not dilute the ownership of a company.

Definition of a Royalty Loan


 * 1) REDIRECT []Royalty loans are not to be confused with a royalty interest as is commonly applied to intellectual property such as music or patents, or to drugs in the pharmaceutical industry, or to oil, gas field or mineral rights within the natural resources industry, whereby the holder is entitled to a stream of future royalty payments based on extraction, sales of an as yet developed drug, oilfield, or invention. Such royalty streams are highly speculative and have a entail high level of risk but also have the potential of generating a highly profitable and lengthy  stream of royalties.

Types of Royalty Loans

A royalty loan can be structured in a number of ways, two of which are follows:

A pure royalty is structured to be paid as a percent of sales payable to the lender for an agreed upon term, typically 10 years, however it may be shorter or longer, or even structured to run in perpetuity. Generally the longer the term, the lower the royalty percentage. A pure royalty is the only form of repayment of the loan, and therefore includes both principal and interest.

An incremental royalty is similar to the pure royalty except that it is calculated on the difference between a company's annual sales during the 12 months prior to issuance of the loan, the base year and the sales each year thereafter. An incremental royalty is typically used as an enhancement to the repayment of principal, and the principal itself must be repaid in the form of a note.

For example, a loan of $4 million based on an incremental royalty repayment, would require equal monthly payments of principal and interest of $88,977 plus a royalty of say, 1% of monthly sales over the sales of the same month in the base year. So if sales during the month of January, 2010 were $1 million, 2010 being the base year, and sales during January 2012 were $1.3 million, the 1% royalty times the incremental sales of $300,000 is $3,000, which would be due in addition to the $88,977 P&I payment.

is similar to a traditional 5-year mezzanine loan, but differs in that it utilizes a royalty enhancement instead of warrants which are exercisable into the stock of a company. The royalty is calculated as a percent of a company's gross sales, or its incremental sales using the prior year's sales as the base above which a royalty is paid.

Royalty loans may be used for many corporate purposes including working capital, stock redemption or buyback, funding acquisitions, etc. They are primarily suitable for use by profitable, later stage companies and are not well suited for use by unprofitable early stage companies or start-ups to raise capital.

Investments and Investment Funds

The principal fund currently making investments is #REDIRECT []Arctaris Income Fund, LP, so named an 'income' fund as it is structured to yield current income unlike most venture or private equity funds that are structured to yield a return in their latter years.

Arctaris Co-Investment, LP is a co-investment fund that is co-investing with the Arctaris Income Fund, LP.

Notable Royalty Investments In 2009, Arctaris Co-Investment provided royalty financing to #REDIRECT []Emerald Biosciences, located in Bainbridge Island, Washington.

In 2011, Arctaris Income Fund provided royalty financing to Leonard & Company, a brokerage firm based in Troy, Michigan.