Continuing our writeup of SOTX, we explore how investors approach the music industry, and what their requirements are.
The feedback we got from this panel consisted mostly of common sense principles: investors are looking for businesses with a solid track record, and revenue streams that have been, and are able to continue growing organically. Investors want to support platforms, not specific artists or records (though copyrights are seen as an important asset to have on the back-burner). The purpose of most investments should be to further develop the platform and scale, rather than to prevent a business from going bust.
It did seem that a voice was missing on the panel – a representative music fan. As artists have become more business savvy they have looked for their own sources of crowd-funded investment, and there’s an argument that fan funding is now the life force of the music industry – a decentralised model of investment which has replaced the old record label model. It certainly takes time to build up a robust, participative fan base, and if you wanted to adopt a calculative mentality you could say that for better or worse, every live show is now both an attempt to win hearts and a pitch.
Getting to the next stage – venture capital – requires an evolutionary leap, and a lot of formalisation. Referring to his investment in record label 13th Month (十三月唱片), Scott Zheng 郑刚 (Founding Partner, Buttonwood Capital Limited) said there wasn’t really a process – he just happened to be into the music. While some might view an investment in music as a passion project, for the most part enterprising artists will have to skill up, or bring in friends that are business savvy and able to provide the numbers-based argument that accompanies all the cool creative.
The major takeaway from the panel was that artists need to remain focused; they need to stay true to themselves, but also set definite goals for what they want to achieve in the long-term. There are often numerous opportunities to chase quick money. Diligence and professionalism will pay off, and the right investors will gravitate toward those who remain passionate and focused.
Participants
Charles Wang 王利明 (Managing Director, Zero2IPO Capital)
Lee Wu 李武 (COO Blue Whale Media)
Scott Zheng 郑刚 (Founding Partner, Buttonwood Capital Limited)
Alex Wang 王维玮 (Director, Meridian Capital China)
Timmy Guo 郭志汀 (Vice President, Milestone Capital)
Host: Ren Hang 任航 (Founder, Musiker)
*Photo courtesy of Xinhuanet.com/Xiao Xiao. Featured band: Namo