Urban Capital of America today announced that Sanford Robertson, Co-Founder of Francisco Partners, is investing in Urban Capital Royalty Fund I, a new mezzanine fund that uses royalties instead of warrants.
In its simplest form, a royalty is paid to the investor on the business’s revenue growth over an agreed upon and limited time frame. The funding is typically structured as a loan to the company and principal, interest and the royalty are returned over a term that meets the business’s cash flow requirements; with no valuation debate or exit necessary. After the loan term ends, the investor has realized a fair return on their capital, the company has grown in size and the business owner still owns and controls the company. According to Urban Capital, this “pay as you grow” approach creates a correct alignment of interests between owner and investor.
Mr. Robertson pioneered the creation of West Coast technology banking as an industry in the late 1960s and has remained one of the industry’s most renowned participants. He served as vice president and director at Smith Barney before founding a firm that later became Montgomery Securities. In 1978, he founded Robertson, Stephens & Co, one of the most significant underwriters of IPOs, mergers, and acquisitions. After selling the company in 1998, he founded Francisco Partners, a technology-focused private equity fund.
“I am so pleased to have Sandy invest in our U.C. Royalty Fund I,” said Urban Capital Chairman and CEO, Barry Wilson. “Sandy Robertson is a legend in our industry and I am proud to have him as an investor in this very important fund.”
Mr. Robertson has had significant financing involvement in over 500 growth technology companies, including 3Com, America Online, Applied Materials, Ascend, Dell Computer, E*Trade, Siebel, and Sun. He serves on the boards of Dolby Laboratories, Pain Therapeutics, Salesforce.com and the Schwab Fund for Charitable Giving, as well as on the President’s Board at the University of Michigan.
Urban Capital of America provides growth capital to small and medium-sized businesses. Urban uses Royalty-Based Financing instead of warrants or equity. The firm is led by Barry Wilson and is based in Laguna Niguel, CA (www.urbancapital.com).