Musician’s Guide to Investors: Angels, Labels, Grants, Crowdfunding & More
Don’t let money be the wall that keeps you from chasing your dreams. This guide covers multiple types of music investors and investments that could support your upcoming career.
by Lauren Davish of the Disc Makers Blog
Being a musician is a creative, rewarding endeavor that’s not exactly for the faint of heart — or the shallow of pockets, if we’re being honest. Whether you’re just starting out or you’re years into the game, we musicians all know one thing for sure: it costs money to do what we do. As an independent artist, relying on streaming platforms and music royalties might not be a sufficient revenue stream to further your career.
Recording, traveling, buying and maintaining instruments, paying other musicians, and keeping up with your online presence are just a few things that continuously add up when it comes to supporting yourself as a musician. While selling merch and touring can be a big part of your income, you may find yourself in a spot where you need more than you’re bringing in — which is where a music investor can help.
Types of music investors
There are several different types of investors you can solicit when deciding how to support your music career. Some you may already be aware of, while others might surprise you.
Angel Investors
Angel investors are individuals who have the funds and inclination to invest in a business or person whom they feel passionately about. And since your music career is, in fact, a business, working with an angel investor is an option for you.
Angel investors sometimes work in groups, known as “syndicates” or “angel networks,” which typically include group members with expertise in different areas. Additionally, the risk of investment is divided amongst them, instead of one individual having all their eggs in one basket. If you can catch the attention of an angel investor, whether an individual or in a group, they may also have ties to others in the music industry who can help you along. After all, they now have a stake in your success.
Record labels
Record companies and labels — whether major or independent — can be significant music investors. Again, your success is their success, so you’ll be financially backed everywhere from recording, to marketing, to distribution, to touring.
It sounds great in theory, as the label’s investment will likely bring about high-quality record production, heavy marketing and promotion, and a wide audience reach via music distribution and tour support.
However, many emerging artists choose to stay away from labels these days, as being an independent musician is a feasible approach to a sustained music career. But getting signed could certainly be the best decision for your career — just be sure you know how much creative control you’ll maintain, get yourself a good entertainment attorney, and always get everything in writing to retain your music rights.
Arts councils and grants
Funding your music career can also be supplemented through your local government, or more specifically, through an “arts council.” Arts councils are organizations that are invested in the local arts and culture scene and support local artists through grants.
One major benefit of receiving funds through an arts council is that you — more than likely — won’t have to worry about providing a return on their investment. You will likely need to develop and show your business plan to obtain a grant and explain why your music is socially impactful to your local arts scene.
Crowdfunding
Crowdfunding is a great option to secure one-time or recurring funding in a space where you won’t have to worry about paying back the investment. It’s also a great way to engage with your fanbase and make them a part of your growth as an artist.
Whether you’re looking for support in recording an album or going on tour, you can leverage sites like Patreon, Kickstarter, and Indiegogo to provide a platform where your fans can give you a financial hand. Additionally, crowdfunding campaigns give you incentive and content for promotional exploits as you broadcast your upcoming tour, album, or other creative endeavor.
Pros and cons of music investors
Your music career is a business, and just as it is with any other business, having investors on board has its pros and cons. Ultimately, it’s up to you to decide what’s worth your time and what’s best for you.
Pros:
- More financial support means more time for to create. One of the biggest issues musicians face is not having enough time to devote to their craft because they’re also using their time to work a job (or multiple jobs) to pay the bills and the expenses that come with being a musician. Having an investor lifts much of this burden, and you can devote your time to creative efforts knowing you have secured a net of financial support.
- Access to business expertise. Working with investors can provide access to their knowledge and contacts in the business world. This can save you time, help you learn more about the business side of the industry, and connect you with other people who can advance your career.
- Long-standing collaborations. You will likely make many new contacts through your investors, which can help you in the long run when it comes to maintaining your music business.
Cons:
- Less creative control. When someone else is invested in your career, they may have opinions and influence over issues they believe could have a financial impact. They also may expect to have a say in certain creative endeavors and your music catalog, which may be the last thing you want in your career.
- Added pressure for return on investment (ROI). Unless you’re working with an arts council or crowdfunding, most investors are looking for a return on their investments, or ROI — meaning, they not only want to get repaid, they expect to earn a profit. This might add more pressure on you to focus on making revenue, which may compromise some of your creative and business decisions.
- Royalty sharing. Your investors may take a percentage of your music royalties, as well. While this may not be a negative if you’re making a decent income, it’s something to consider when shopping around for financial support.
Do you need a music investor?
Deciding if you need an investor for your music career depends on your long-term goals and overall financial needs. For example, if you believe your career opportunities would expand if you had the means to record with a well-known producer or hire a professional marketing firm, a music investor might be the next right step.
Alternatively, you could seek other sources of funding, such as licensing deals, crowdfunding, or grants and avoid the pressure of making a return on your investment.
No matter what you decide, be sure to be clear on what you need as an artist. Whatever you do, don’t compromise on what you feel passionately about and make decisions from an informed space.
