I want to launch a startup that would build apps and marketplace platforms for the entertainment industry. These apps / platforms would then feed data into a single CRM and be managed from a central dashboard. I want to pitch it to investors and clients as an on-demand “Artist Career Management and Marketing” CRM. Initially target market is the independent artist in the music industry and later expand to services other categories in the entertainment industry such as movies and TV. The problems faced in the industry: i) There is no proper career path in the business ii) Too many middlemen involved iii) Piracy and changing attitudes towards music ownership iv) Drying revenue streams v) Outdated legal framework Solution: i) Create tools that would help artists make independent and informed decisions by using smart algorithms and tapping into big data (yes big data is now available for the industry). ii) Provide artists with on-demand services so that they don’t end up getting into management contracts that can cost them a lot down the road. iii) Help artists identify new and nontraditional revenue streams. iv) Help artists diversify skills. I have talked to a lot of people in the industry and many think it’s a good idea, but they are not tech savvy and do not understand how this could be executed. What do you think?
When it comes to idea validation, get testing now. Pick a few artists from different forms of entertainment and see if you can start making them streams of revenue with your idea.
If you can, great. You now have case studies to work with. You have something robust to pitch. More importantly, you'll have validated your idea and this will give you confidence to explore how you can upscale your work.
I've launched several music startups and pitched to more than a hundred "investors."
I live in a city where entertainment tech is virtually unheard of. If you do too, I bet you already already know that it's difficult to raise investment from tech funds and incubators when the entertainment industry is misunderstood, or worse, understood as "less viable" than other industries like healthcare, for example. That's a battle you can't change over night. It takes a whole city infrastructure and culture shift to change that.
Of course, it will always remain interesting to me how a $16.5B music industry can be disregarded as a "niche" industry. There's clearly money there, but in terms of portfolio management, "niche" is a reality you're up against if you're seeking those types of investors.
Successfully raising funding for a music/entertainment tech concept often requires a completely different type of "investor" and a completely different type of vibe of relationship. If you're launching a music tech concept, spend more time building real friendships with those who have the resources to support you, as opposed to trying to "pitch" into pools of money. Share your passions with the millionaires next door who love music or entertainment. Find those who have already made profit within music or entertainment, or find those ex-touring musicians who now have discretionary income. These types of investors are the people you want on your team anyway. They're more like supporters. They're hiding behind the scenes in small cities. Sometimes they're masked as CEOs who already donate into the arts. Sometimes they're quietly living in the suburbs as successful composers for global clients. Either way, they're often genuine, heart level people who have saved their money in smart ways, know how to recognize bullshit, care less about profit, and invest in things that light them up. Wear your passion on your sleeve, dig, and you will find them.
I'll close with this -- I have two buddies who just raised $1.5M seed for their music tech concept. I also know several music tech companies around the world who are constantly grinding. Usually, the head of these companies has a background in music and a community within the music industry. They have built music tech that solved a major problem they personally experienced as artists, and they leveraged their community by sharing the story of their beta process to their friends as they tried and tested profit. They made sure every one of their potential supporters saw their hard work before they ever made an ask. Just a different vibe and process, for sure.
If you need help with your beta, launch, or want to develop new friends in the music industry, let's setup a call.
On top of starting to test, you should also focus. Rather than trying to solve all five problems you've highlighted, talk to your prospective customers and figure out which one of those problems is causing them the most pain. Then focus on that and solve that problem really, really well. Superficial validation "sounds like a good idea" is no validation at all.
Your idea has too many masters to please. It's for the industry, but it's also for the artist. It presumably enables the artist to accomplish something with their fans/customers. So, it's for them, too. Pick one problem and solve it.
Don't bother trying to solve a problem for the big 3. They have only one goal when it comes to investing in tech companies: extract as large an up-front licensing fee as possible before the company runs out of cash. Consequently, they're looking for companies with a fresh seed or series A or B round whose business model absolutely relies on licensing their IP.
They are not interested in placing a bet on anything else. I know because I wasted a lot of time pitching to them (Sony, UMG, WMG).
You'll do much better focusing on solving a problem for the artist that doesn't make them replicate what they're already doing. In other words, you don't want to be YET ANOTHER middle man. Yet another platform for them to have to play on. They won't join unless you have massive, paying fanbase, which you don't ... or you can SHOW that your platform more accurately, intelligently, or otherwise successfully connects the artist with the specific people they want or need to reach.
That's a tall order, and like any platform play, it suffers from the chicken and egg question. How do you get a valuable group of users (fans), without the artists on board? And how do you get the artists on board without the fans? Simply setting up tools, favorable monetization structures and architectures won't be enough to attract either side.
But you asked about successfully pitching the idea. Short of building test version that can validate your assumptions, you could devise an architecture and set of rules (algorithms) that in some way makes artists more successful. If it comes across as plausible, you might be able to successfully pitch that. For example, you could say your system is more efficient, pulling together artist data and media from Bandzoogle, Reverbnation, Sonicbids, iTunes, Tidal, CDBaby, etc., and compiling it with their own social media accounts, event calendars, merch sales, etc., to produce a single dashboard that ... what? That's the key. In what way does it make the artists' lives better? Remember, they have almost zero incentive to try something new, untested, without an audience, even with "good" terms. Why? Because the amount of work required to set up on the new system isn't worth the risk. Unless you make it obvious that it is.
If you are able to create such an app idea, or place (even "on paper"), investors will want to know why you, personally, and your team are the best people to actually make it happen. If you can hit that note, too, then they'll want to know why you won't be made irrelevant if company X decides to simply add features you propose to their already vibrant businesses. Lastly, if you can convincingly and compellingly answer those questions, they'll want to know how much it costs, how long it will take, and how they will make their money back.
First, though - pick just one master to serve, and make it all about them. Doesn't matter if it's artists, fans, industry promotions folks—as long as it's clear your idea will make their jobs better (easier, cheaper, faster, more profitable). Ancillary opportunities can be glommed onto that core product later, if you succeed, but without focus, you risk appearing as a bad investment.