Hal Davidson, Rockville, MD USA
Concert / Festival Consultant

ConcertPromotions.org
In the business of concert and music festival promotions and in a world
where few will lend a hand, concertpromotions.org provides information
helpful to the new concert and music festival promoter.

Finding funding, the pursuit of concert and festival investors…
No question, the biggest obstacle to new concert and music festival promoters seeing their concert and music festival dreams come true, is finding the financing for their event. Even seasoned promoters have difficulty finding funding for worthy live music projects. The main reason for this problem is that potential investors are typically conservative in their thinking and view concerts and music festivals as non-tangible endeavors. Investors see concerts and music festivals as risky.
With the fact that promoters are also thought of as less than ethical, shady characters, you can see why these investors are reticent.
However, investors are out there.
Banks will not invest in fests or concerts unless you can collateralize the loan.
Venture Capital (VC) firms are a maybe. It really depends on whether you are an existing company or you have great credit personally and have another venture or business with a financial track record. Every week you hear about another IT related company securing funding. That’s a model that’s popular . But festivals are not the type of business they are looking for.
Crowd funding does not fit this standard online funding method. Why, because festivals cost hundreds of thousands or millions. www.kickstarter.com and most crowd funding systems have a limited time to raise this huge amount. You offer a t-shirt or a ticket in return for a $50, $100 or $150 contribution.
Some equity crowd funding www.crowdfunder.com. Since the SEC has relaxed solicitation restrictions, this crowdfunding option lets you raise capital and offer an interest in your event.
www.equitynet.com offers software to maximize your site that you design for crowd funding and allows you to offer contributors an equity share, not just a ticket and T-shirt.
Problem with these equity crowd funding options are that you are responsible for providing 100% of the marketing in the way of social networks. You drive the traffic to either their website or yours. It’s a full time relentless job and the clock is ticking from the tome you start because you don’t want to take a year to reach your goal. To use this method, you will need a massive database driving traffic to your fund raising site. Without steady, robust traffic, the site will just sit there. Your contact base needs to be developed before you start, not after. Upon launch, the offer should be blasted all over the social networks. Spelling, punctuation and grammar must be perfect. For the campaign to stay fresh, you should raise your funds within 3-4 months. You should not use these funds unless you have raised 100% of your goal, otherwise, return what you have raised.
Social networks are the modern way to connect. Facebook and Linkedin are the two that count. So building up your database over the past few years may pay off. Certainly, when you receive a friend request from an investor, banker or venture capitalist, you want to say yes. When you are ready to promote your opportunity, one by one contact them with the same basic message. Make sure your contact info is in every message offering them a summary link.
Friends and family are the preferred way because there is a personal connection. They know you. However, what you must consider is the downside of what happens to the relationship if they take a heavy loss.
Angel Investors (Angels) or business contacts are the best option, an investment group of doctors or lawyers, a friend of your father who has raised funds for other projects. An Angel Investor is an individual or group who looks for investments and is frequently willing to take a risk based on the merit of your project, the plausibility of your plan and who you are. An entertainment Angel Investor is obviously the best choice because they understand the business.
Your effort to find the right investor is going to come down to RELATIONSHIPS. This is why funds coming from someone you already know or someone related to someone you already know is the most likely path. The investor is most concerned with one thing, TRUST. If they know you, they are more likely to trust you. No trust, no money. So to help develop trust, consider offering investors the use of a third party accountant to disperse and account for funds generating a weekly financial report. Payment of bills then requires receipts, contracts, invoices, check requests or purchase orders.
Almost never will an IT or oil and gas investor say yes to a concert or festival offer.
Agents and third parties works. Especially if you are not well networked and are somewhat of a loner. Agents and third party representatives will emerge if you mention your project to everybody you speak to. If you want to motivate these bird dogs, offer them a substantial cash reward from the initial funding (versus or plus) a percentage of the net profit. It’s wise to have a one page agreement stating exactly what the terms are and the expiration date. When offering a percentage of net, perhaps increase it for this agent performing within the next 45-60 days. This is also the period they will most likely exhaust their primary database.
Sponsors Every new promoter’s mind goes directly to the thought of financing their event with sponsorships. But soliciting sponsors comes after you obtain CORE funding. Meaning you need to have an event first before you can solicit sponsors, because the first thing they ask is “who’s performing?”. For your sponsor deck to ask for thousands or tens of thousands or hundreds of thousands of dollars, a venue, the dates, a website must be secure. You want a sponsor to invest in thin air?
Unless you or your business is an already existing concern, a running business, sponsors can’t gamble on your theoretical event. Core funding means you have raised or invested enough money to incorporate, start your business, built a website for that event, secure the venue, PAY FOR TALENT DEPOSITS, have a marketing plan, have a sponsor deck and have intelligently evaluated your sponsor assets or inventory so you can intelligently talk about what you can offer the sponsor, not only with regard to marketing impressions you are offering he sponsor, but what plan you have to ensure reasonable ROI (return on investment). Sponsors now want to know how they can offset their expenditure in your event with actual sales of their product. So although it is important to develop your sponsor deck or proposal from inception, you’ll most probably get turned away from that big corporation until you have a real tangible event.
Granted, a school, college or non-profit is a different story and that they may start to approach sponsors as soon as their event is formulated, this sponsor campaign usually pertains to smaller events from local sponsors looking for smaller contributions. These orgs already exist and hold annual events so there is some existing credibility. Non-profits need to assign one person to become educated on the subject. The best resource to learn about the structure of sponsorships is IEG. Learn more at www.sponsorship.com
Live Nation, AEG or other large Promoter Bad idea. These two global promotions companies are your competitors. They are notorious for not responding to lesser promoter’s appeals. Trusting either is a mistake. What is their motivation to help cultivate you and your event into a vibrant force? Zero.
Advertising is a good option. This means ads in financial newspapers or the financial section of your daily newspaper. Print is a frequency medium. You must run your ad for many weeks for any hope of finding that right investor. The idea is to get them on the phone to give your two-minute pitch.
When speaking to investors on the phone:
  • Introduce yourself and your event and where it is.
  • Show them respect, they are very important to your dream becoming a reality.
  • Know exactly what you are going to say and try to keep it succinct.
  • No background noise.
  • Do not say ums or uhs in between your sentences, know your answers to their questions.
  • Do not speak in long paragraphs, use short meaningful sentences that tell a clear story.
  • Do not speak too fast due to your excitement. Keep it metered, giving the other side a chance to insert questions or comments. Listen for their attempt to talk and let them. “Say, I’m sorry, go ahead.”
  • Know what you are asking them to do next. Email them an Executive Summary is a good idea.
  • Can you post your proposal on a website only found by giving the URL?
The primary directive when trying to raise funds for a concert or music festival is to speak to everyone you ever knew about it. Anyone new you speak with tell them about your event and how much you are looking for what is the return on investment ROI. Know your project, know your marketing plan, know your costs and profits.
Have an under 2 minute pitch. A catchy festival name, having supreme knowledge about the market you are going after, knowing your costs, breakeven point and potential gross and net.
No matter what your fund raising direction, to promote a concert or music festival, you need a:
  • ONE SHEET 1 page review w/ your contact info up top & what, when, where, who.
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  • EXECUTIVE SUMMARY 2-4 pages with profit overview per expanding attendance.
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  • BUSINESS/ INVESTOR PLAN 6-20 pages depending on the size of your project.
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  • COST & REVENUE SHEET 1 page for a concert, 2-3 pages for a festival.
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  • EMAIL PITCH A simple email summarizing your project including the basic figures: how much do you need, what does it pay, what are your costs, what security can you offer, a double signature check, etc. provide links to your proposal or to a similar event. Do you have a website summarizing your background explaining the project? Use a bold colorful title and subtitles with bullet points or separated statements. Make your email fun and easy to read, make it eye candy.
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  • NEVER use a big block paragraph, it looks bad and shows you do not know how to write a compelling sales document or email.
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  • ALWAYS include your contact information in everything you write and proof it. No misspellings. Edit!
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More event funding tips
Whenever there are changes in your plan or cost sheet, make the changes everywhere immediately so that everything is current and matches other docs. Upgrade and modify your plan as you gain more knowledge about the market or how you can improve your event. Do not allow your plan to get stale. Change dates and improve the look of your proposal as you grow smarter and more informed of the surrounding and developing facts about your own project.
Develop trust with your investor prospect. They are testing your communication skills and you are, theirs. If you are late for meetings or delay call-backs and email responses, you are degrading the common trust you are trying to build. Grade them too, daily. Speak respectfully, you are not talking to your friends. Laugh at their jokes but don't make it a jokefest.
Laser focus your conversations and your plan. Don't let conversations drift to politics or your feelings for pets. It's about your plan and your prospect's chance of scoring in their investment in you and your project. You need to appear focused and committed to this one thing.
Don't let yourself get too excited about your project or your prospect's interest. Do not become emotional, stay business-steady and moderately enthusiastic. Keep cool under fire and understand the investor is going to throw you curve balls and be a "devil's advocate".
Try to propose a concept that has worked elsewhere so you can use examples to convince them of your project's viability.
Make your concept relatively easy to understand. Trying to take too much, confusing your laser focus by throwing in too much complication will make it difficult for a potential investor to digest. Make your proposal easy to understand. Additionally, if your project is too left field, how are you going to prove it will work? You have to justify your findings and reasons for your proposition.
Don't wait for one investor prospect to fail before seeking another. Go after as many as you can at the same time, the first one that comes through wins. Stay as busy as you can engaging many prospects in phone calls, emails and meetings. Energy in = Energy out
Geographical Affinity Pursue prospect investors located in the general geographical area of your event. Find people, orgs, firms with an affinity to your project. Investors located in that market or state, feel more secure and will understand more about the market conditions, venues and audiences surrounding your event.
They say “don’t trust anyone but yourself”. Not so. There needs to be a certain level of logical, reasonable trust when you start with anyone. The other party will show their cards quickly and it’s up to you to develop an eye and ear for what sounds right and not. If bad signals increase and the other party is not respecting your time, or is not doing what they say they will, even if it’s just emails not being returned in a timely manner or completely, and/ or they don’t return phone calls the same day, these are clear signals of dishonesty or minimally lack of interest. Real business people do real business and don’t play games. You can tell the difference.
But don’t judge people unfavorably if they have had problems in the past. The past does not indicate anything about now and unless you know the details, you don’t really know the truth. Online information and third person reporting, even from the media, cannot be relied upon. Speak to the person directly if you have any questions about them. Judge people by their actions, not by what others say about them.
A formerly troubled person or company may be your best bet. They have learned important lessons and may be able to impart these wisdoms upon you as well as provide funding or ideas on getting it. Look for good people who share your passion and understand what you are trying to accomplish.
Ask for the right amount of investment. Underfunding is a nightmare and impedes your ability to execute you plan with confidence as you originally wished. Unless you have a ticketing system that is going to pay you funds as tickets are sold, you’ll need 100% of the total show cost in advance. Your cost sheet must be accurate.
Geographical Professionalism The irony is that though most major live entertainment funding comes from New York, California and Florida, there is no question that the worst, most dishonest and incompetent operators are centered in these 3 states, particularly NYC, LA and Miami. If you try to raise event funding in these 3 important markets, you better have your helmet on, prepared for major B.S., delays, scheming, manipulation and lies. It’s not recommended to ever tell potential investors in these markets that they live in a land of thieves and liars.
Communication Look for and work with professional communicators. From experience, we can tell you, people that repeatedly use “um, uh and ya know” just don’t have a presence of mind to understand more complicated processes. These folks have never taken a public speaking class, aren’t smart enough to know they sound like idiots and are very unlikely to impress anyone else. Do you want them communicating your project to others?
Deal with “normal communicators”, not rude, terminally stupid people unable to show up on time or call you back. Normal communicators call you back today, they email you back today. Abnormal communicators justify not calling you back and not emailing you back. Know the difference between normal and abnormal. Not showing the respect of a return call or email is the tip of an iceberg revealing a further lack of ethics. Best practices means doing your best work, not your worst. Find people who know how to care about others.
Which are you?
Ways to pay an investor
  • A net % of the total event, all revenue streams
  • A net % of just ticket sales incl. VIP tickets
  • A guaranteed return on investment
  • Shares of your company stock
Types of concert/ festival investor agreements
This is a summary of the most popular documents used when approaching concert and festival investors.
Please note: When formulating any of the following documents, a lawyer should review it before using. Also realize that different types of investors require different types of documents. Remember that both parties require a signed, dated copied to be considered binding a court of law. Always read every word of a legal document before signing your agreement with every provision stated therein. Then remember that you are responsible for complying with the terms of any agreement or you and your company could be sued in court. In the event of a lawsuit, even though your company may be found at fault, officers and owners are regularly sued. The Plaintiff will go after everyone they can. You are then the Defendant.
INVESTMENT or INVESTOR PROPOSAL
An investment proposal for a concert or music festival should be written as an abbreviated form of a business plan providing details about your event and its business, explaining the way you intend to use the funding you are asking for from investors. It is important to write your investment proposal letter with the investor in mind. So be aware of the concerns an investor may have when looking to invest in your project. Either in a separate accompanying document or summarized in the investor proposal, a scaled matrix showing growing attendance, costs, gross revenue and net profit forecasts.
PITCH BOOK or PITCH DECK
When pitching an investment group or institution, the starting point is the initial Pitch Book or sales introduction document. Your Pitch Deck is your business plan translated into slides, typically in a PowerPoint document.
While a Business Plan tends to be a long narrative of the business intended for one person to read on their own, the Pitch Deck is used to present your concept directly to a room of investors. Sometimes, the Pitch Book/ Deck is often requested by investors ahead of your presentation so they can get a more brief synopsis of your idea, so it’s a good idea to have it ready before you start contacting investors. Making a careful arrangement and analysis of the investment considerations, the industry, your market and other event comparisons help make your case. What’s the case compelling investors to take advantage to this opportunity?
Unlike an Executive Summary, which is also a 2-3 page summary of your business plan, the Pitch Deck tends to be more visual, highlighting a few key points very well. It's particularly useful when showing off graphs and visuals that help communicate the value of your idea. Print it, bind it and have it also ready for a projector presentation. Then be prepared for the next step.
(LOI) LETTER OF INTENT
An LOI or Letter of Intent refers to a specific topic under discussion. It is a document outlining one or more agreements between two or more parties before the agreements are finalized. The LOI indicates the intent for each party to enter into business together and states proposed terms and circumstances IE. (we propose to promote and produce XYZ concert in the Madium Stadium on Saturday, August 1, 2018). The LOI should be between one and five pages, not too detailed, summarizing the intent.
LOIs resemble short, written contracts, but are usually in tabular form and not binding on the parties in their entirety. Many LOIs, however, contain provisions that are binding, such as those governing non-disclosure, governing law, and exclusivity or covenants to negotiate in good faith. An LOI may sometimes be interpreted by a court of law as binding the parties to it if it too-closely resembles a formal contract and does not contain clear disclaimers.
A letter of intent may be presented by one party to another party and subsequently negotiated before execution (or signature). If carefully negotiated, an LOI may serve to protect both parties to a transaction.
(PPM) PRIVATE PLACEMENT MEMORANDUM
A PPM is the document that discloses everything the investor needs to know to make an informed investment decision prior to investing in a Regulation D Offering. Unlike a Business Plan, the PPM details the investment opportunity, disclaims legal liabilities and explains the risk of losses.
The PPM is important because it provides the investor with all of the prescribed data they will need to make an investment decision and includes the actual documentation to effect the investment transaction. PPMs are designed as a stand-alone document - meaning that there need not be other information presented to the investor for them to make an accurate investment decision.
Private Placements or Private Stock Offerings are “private” equity/debt transactions and are considerably less expensive to complete than an initial public offering such as an IPO (for the purpose of raising capital). So there is a cost for a professional to compose the PPM according to standards in the investment industry. The cost is rarely less than $2,000.00.
A private placement is the sale of securities (stock) to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds but can be a sophisticated investment group which uses lawyers and accountants in the process.
A private placement is different from a public issue (IPO), in which securities (shares) are made available for sale on the open market to any type of investor.
Instead of a Prospectus, these securities are sold using a private placement memorandum (PPM) and cannot be broadly marketed to the general public.
Since a private placement is offered to a few select individuals, the placement does not have to be registered with the Securities and Exchange Commission (SEC). In many cases, detailed financial information is not disclosed and the investment is not sold by prospectus.
(MOU) A MEMORANDUM OF UNDERSTANDING
An MOU describes the terms of an agreement between two or more parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties either do not imply a legal commitment or in situations where the parties cannot create a legally enforceable agreement. It is a more formal alternative to a gentlemen's agreement. In some cases an MOU is used to establish the terms of a common interest, the less formal precursor of a legal, binding document, which may follow in the days, weeks or months after the MOU is agreed to.
Whether a document constitutes a binding contract depends only on the presence or absence of well-defined legal elements in the composition of the document, the so-called "four corners" featuring the required elements: offer and acceptance, consideration, and the intention to be legally bound. In the U.S., the specifics are provided under the common law of the state.
PROSPECTUS
A Prospectus, in finance, is a disclosure document that describes a financial security for potential buyers. It commonly provides investors with material information about mutual funds, stocks, bonds and other investments, such as a description of the company's business, financial statements, biographies of officers and directors, detailed information about their compensation, any litigation that is taking place, a list of material properties and any other material information. In the context of an individual securities offering, such as an initial public offering, a prospectus is distributed by underwriters or brokerages to potential investors.
So although a Prospectus may accompany an Investor Proposal or Pitch Book, it is not typically necessary for concert or festival proposals soliciting investment, but some elements of what would usually be contained in a Prospectus may be included in the concert or festival investment document.
JOINT VENTURE AGREEMENT
A contractual Joint Venture is where two or more parties agree to collaborate on a mutual project, but do not set up a separate legal entity or pool the profits and losses. Each party keeps their accounting records separate and there are no registration requirements. This arrangement is typically between two companies or a company and an individual.
A Joint Venture Agreement is an agreement between two or more parties to combine their knowledge and resources for the purpose of executing a particular business venture, temporary or long term or a for a specific term of time.
You would like to enter into an agreement with another company/individual to work together for a common business objective.
Joint ventures allow you to tap into the knowledge, network, name recognition, or even production capabilities of another company or individual rather than going it alone. Usually, both parties have an equal stake in the venture, and will both reap the benefits, however this agreement could state the reasons why one would receive a greater share of profits than another.
In a Joint Venture Agreement, you'll lay out your business objectives, what resources and how much money each party is contributing. You'll also detail the roles and responsibilities for each joint venturer, and how the profits and losses will be divided.
A Joint Venture Agreement is similar to a partnership, but lasts for a defined period of time. After the business project ends, the joint venture ends. You'll also specify how the Joint Venture can be terminated if it's not working out. When co-operating on an entertainment venture, a Joint Venture Agreement is a way to increase efficiency - and profitability - for both parties.
Summary
Most important to remember, if it was easy, many, many more people would be promoting concerts and music festivals. It’s really hard to learn the industry and even harder for a newbie to secure the funds unless you already have supporters, relatives or business connections willing to gamble on you. Your business is you.
The industry looks fun, sexy and exciting. It can be, but to get to that point, there is a journey of very hard work, endless hours and major sacrifices. Real promoters know that the concert and music festival business is a draining, lonely pursuit filled with liars, haters, incompetents, and stupid people. The concert and music festival business brings these deviates out of the woodwork.
If this is a burning desire that won’t go away, don’t give up. It can take years to find the funds for a concert or music festival. Believe in yourself. Be strong. The path to concert or festival success is laden with many twists, turns, potholes, roadblocks and cliffs. You have not failed unless you give up or die first… You are not alone.
" A man can fall many times in life, but he's never a failure until he refuses to get back up." Evel Knievel
Much more information, instructions, facts and valuable insights on concert promotions and music festival promotions at www.concert-promotions.com and www.concertpromotions.info
Hal Davidson is a concert and music festival consultant and producer with decades of experience working and dealing with hundreds of promoters and potential investors. The promoter of the Legendary Stompin 76, Ringling Bros. & Barnum and Bailey Circus, Ice Follies and Holiday on Ice and many other events, trade shows, casinos, resorts and retail chains, he is also the author of the most comprehensive concert and music festival manuals available.
 
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