How to find Concert and Music Festival Investors

Concert Promotions.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.


Article by Hal Davidson, Rockville, MD  USA    
hal@rentapromoter.com
April, 2014

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.
  The best concert & festival
promotions book available.
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.

Just because someone has a lot of money doesn’t mean they want to invest in a concert or music festival unless they made their money in that business. The fact is that very few people with a lot of money are interested in concerts or music festivals because of the reasons quoted above, lack of familiarity and distrust of the industry.
     

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.
  • EXECUTIVE SUMMARY             2-4 pages with profit overview per expanding attendance.
  • BUSINESS/ INVESTOR PLAN   6-20 pages depending on the size of your project.
  • COST & REVENUE SHEET       1 page for a concert, 2-3 pages for a festival.
  • 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.
  • NEVER use a big block paragraph, it looks bad and shows you do not know how to write a compelling sales document or email.
  • ALWAYS include your contact information in everything you write and proof it. No misspellings. Edit!

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.

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

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. The 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, pervasive haters 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. Unlike most other promoters, he actually answers his phone PH: (731) 438-1597 and emails the same day.

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