Company: User-generated music reviews website
Operating since: 2014
Annual turnover: £490,000 (forecast for next year)
“I started my company about 18 months ago with the idea of creating an online review platform for music lovers. After researching the market by speaking with lots of gig goers and festival regulars I realised fans wanted to share their opinions of the music they love with other like-minded fans. We provide our users with free access to festivals, gigs and albums in exchange for their reviews, enabling the ‘sub-culture’ (rather than just professional music critics) to share their thoughts on the music they love. We’re something of a TripAdvisor for music fans.
We’ve managed to grow our reviewer base and the amount of content we’re featuring on a daily basis. During the last 12 months users have posted in excess of 5,000 reviews of festivals and gigs across Europe, the US and Asia. We’ve also had success securing revenue in the form of advertising from a global technology business Now we want to secure the early-stage “seed” investment that we need to take the business forward. Equity investment from private backers would allow us to improve our online platform, develop new revenue streams and ensure that we capitalise on our “first mover advantage” before rival start-ups get in on the act. For example, we would like to build a smart ticketing system which will enable bands to sell gig tickets directly to their local fans. We’re also keen to secure the expertise of a professional investor that will complement that of our existing team.
We’ve been working with a consultancy to hone our investment ‘pitch’ documents. We were hoping to utilise their expertise in opening doors to potential investors too, but so far progress has been relatively limited. We’re a young start-up, but we’re mature enough to be prepared for the possibility that some investors will reject us. We’re simply frustrated that so far there has been precious little feedback at all, whether negative or positive. To get the ball rolling, are we best off approaching relevant investors directly or is it a case of, ‘it’s not what you know, it’s who you know’? If it’s the latter, what’s the best way of securing introductions to the kind of backer who might be interested in our proposition?”
Well done on getting to your current stage of development. It is also great to hear sensible views of why funding is required, but I always wince when I hear entrepreneurs mention that they have hired a consultant to help raise money. While there are some excellent, experienced advisors out there, there are also plenty of (mostly well intentioned) consultants that will cost you money, waste your time and leave you more confused than you were when you started. To choose the right advisor, one needs to understand the process well enough to do without an advisor.
Let’s assume here that your advisor is perfectly sensible, but things haven’t worked out as you intended. The challenge is to get the money you need to take the business forward.
Given your state of development I’d suggest that you approach investors directly. You mention that you’d like to bring in expertise as well as money, so explore strategic investment opportunities: are there established companies that, for example, offer a ticket sales platform but do not offer your sort of user-generated content and guidance? Do some research on compatible investors: can you find individuals or funds that have done relevant deals in the past? Get creative: are there specific musicians that might want to invest? That latter approach would net you money, expertise and a ton of free PR.
Regardless of who you target, don’t be shy about establishing direct contact. If they are any good, they will always be glad to hear from a passionate entrepreneur who has made the sort of progress you have made. On the flip-side, those same investors might be less enthusiastic about yet another pitch from an advisor knowing that it’ll be necessary to cut through the gloss) in order to get to the real story.