The Search For Music Funding: A Quick Slide Presentation

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Today’s Connected Society Yields Global Possibilities For Success, Exposure, and Creative Funding Strategies

It is about – listening to yourself first – then decide on what your value proposition offers the music-social space

Examine the pulse of social media activity specifically relating to music – trend-spotting (Credit – Juhmas, istockphoto)

Sourcing capital for your project depends on your individualized strategic plan – an artist’s capital formation will be different than a music company looking toward a future IPO. Options include:

Crowd funding Angel Investors Venture Capital Micro-Venturing Friends/Relatives Bank Loans Self-funding Bootstrapping Grants

Let’s examine briefly: Crowd funding, Angel Investing, Venture Capital

Crowd funding – an approach to raise capital from online investors where the stakeholders may expect one of the following;

Equity Profit Perks Rewards Revenue Sharing

Crowd funding – through web-centric sites - can take the form of;

Donations Lending Sponsorship Gifting Investment for a given exchange, i.e.- revenue share, free album download, etc.

Each site has there own sourcing metric and accompanying cost structure – you must do your due diligence to determine if they are the right fit for you or your music company

(Credit – Svilen Milev, stock.xchng)

Selected sites to consider for crowd funding;

Kickstarter IndieGoGo Rockethub Sell-A-Band GmbH Pozible Artist Share ChipIn FansNextdoor

Angel investor – is a high net-worth “angel” who invests their own money in start-up companies -> usually for an equity stake. The goal is to earn a return on the exit – sale, merger

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Questions to ask and explore:

Is my business right for an angel investor? As an artist you are a business!

When do I approach an angel individual or group? Do I know the guidelines angels use for selecting? What process should I expect to prepare for? How do I protect myself? i.e., non-disclosure

agreements Am I expected to pay for the right to be considered? Who are the most reputable firms? Do they meet SEC requirements?

( Source – ACA )

Where to go for more angel investment information – Angel Capital Association - http://www.angelcapitalassociation.org/

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Venture capital firms invest in new start-ups while taking an equity interest – similar to angel investors. The difference between Angels and VC’s include:

VC’s invest funds from outside sources, Angel’s invest their own money

VC’s tend to invest in companies in the later-stage, Angel’s usually invest in the early-stage

Size of investment – Angel’s tend to invest $5000 - $100,0oo, VC’s $2 million or more

Angel is best for early stage music startups -> including artist’s looking for a capital infusion

VC’s will be actively involved in your company -> usually a seat on the board at minimum

VC association for comprehensive information: National Venture Capital Association