How to Attract an Investor

For Your Record Label

Investors are a great way to hold you accountable, to light a fire under you, and to ensure that you take this endeavour seriously!

But how do you find someone to invest in your record label?

This is actually a question that I’ve been asked a lot in our community.

Here’s what I want to propose, instead of asking how do I find someone to invest in my record label – I think the better question is to ask why someone would want to invest in your record label?

When we’re able to answer that question, it opens up your own understanding into what type of investor would be ideal for our record label.

So, let’s look at the three reasons why a bank, an angel investor, an arts council, a friend or a relative would consider investing in your record label.

Once we break down these investment motivations, we can then see how this changes how we present ourselves to a potential investor.

Here 3 common motivations and expectations of investors…

Investor Motivation #1

Investments with Modest Gains

~10% annual return, to keep on par with inflation or ideally beat the annual rate of inflation.
Similar to what they would expect in the stock market or in high interest accounts with a bank.
This means, if a family member loans you $1000, at the end of the year you pay them back $1100, or $100 in interest. Or if they loaned you $1000 for five years, you would pay them back ~$1610.
This is not a crazy amount of money for them, but certainly a (somewhat) safe place for them to keep their money.

Investor Motivation #2

Investments with Outsized Returns

Similar to investing in a startup like Facebook, Google, or AirBNB.
Risky, high chance of loss… but an attractively outsized profit if they get lucky!
In most of these cases, they are giving money in exchange for equity in the business… They may not be expecting interest or dividends, the money is gone until the company sells, or it starts earning profits that can be distributed to shareholders.
Extreme expectations (Likely to either 10x their investment or easily losing everything)

Investor Motivation #3

Investments with Philanthropic Benefits

The meaning behind the investment is the priority for the investor
Their ROI is not necessarily monetary.
Your values is what they value!
They are fully prepared to lose their investment – it’s often a given.
The money is more like a donation than an investment..

WATCH THIS EPISODE

ON FINDING AN INVESTOR

Let’s discuss how you can present your label to an investor, once we know what their motivation is…

If your potential investor is looking for modest gains…

Find out how much investment you can handle.
Be specific with what you need the money for.
Have a plan for how you will earn/save the investor’s interest payment.
For example: a friend gives you $1000. You need to have a specific purpose for that entire amount, what it will buy, how it will work for you, meaning whatever it purchases, needs to make AT LEAST $1000, ideally more. Ideally a profit for your investor, and for the label to keep…

If your potential investor is looking for an outsized return…

What unique, proprietary advantage does your record label have that puts you in a position to generate outsized returns?
If you don’t have a realistic path to an outsized return, then don’t ask for an outsized investment. Don’t promise an outsized return without proving how it’s possible…
I’m some cases, a large investment can be used to give you this unique, unfair advantage.. for example buying a piece of equipment or real estate that then sets you up for more realistic outsized returns.

If your potential investor is investing for philanthropic reasons…

Show them how you are currently furthering a cause or promoting the values that they value…
Tell them exactly how their investment will make an impact.
Ask them what initiatives are important to them and what they want to be a part of…
These types of investors want to feel good with what they’ve done with their money.