Unlocking the Money / Guide to Music Tech Fundraising

Most valuable commodity or asset that a founder and entrepreneur has, whether it be with their investor or their consumer is trust. Getting investors in your startup is difficult. And getting investors in the music industry is difficult. That combination is difficult. This episode is gonna be talking with Amanda about ways to think, ways to act, ways to be to get money into your startup. Hey guys, and welcome back to Sound Connections. I am a very lucky man because I'm talking with Amanda Schupps today.

I met her over LinkedIn and she did an amazing post that we're going to talk about today. It's about early stage funding for startups. Amanda, where are you? I am in New York City and the power of LinkedIn, my friend, I'm telling you, do not underestimate the power of LinkedIn, my friends. Is what... Yeah, I have really come to know how powerful it is. I've been sleeping on LinkedIn for the last few years and then I think a bit more than six months ago, I really started using it and the solo opportunities it creates.

Yeah, I think everyone's been sleeping on it. I just started using it more in the last, I'll say 12 months, but I think everyone has. So everyone like for whatever reason has come to it in the last year or so. And that's, I don't know if that was going on several years ago. I think we're all coming to it at the same time, but I think it's going well. Yeah. Well, I got the opportunity to know about you and read your posts. And Amanda, before we go into that post, because that's what we're gonna use the time on today.

What do you do? I am an advisor in the music and music tech space. My goal is to bridge the gap between rights holders and talent and sort of the more traditional music industry with the newer music tech industry. With a focus on the startup space, I have a 20 year career working in publishing and distribution and artist writer producer management. And now I'm sort of working with more music tech founders and investors and people looking to bring, I guess, the music industry sort of into its next phase. But of course, you can't do that without

engaging with the people who have been running the business for the last century. And so my role is really to close the gap and connect those two parties. That's great, amazing. And that's an important job and what I really love about the things that you posted on that I'll get to now is there's a lot of starters also sort of navigating this space. And it's not just artists and rights holders, but it's founders that are trying to get into the music industry, that's meeting the traditional music industry, that's also meeting investors. And you know, this whole space is a combination of quite complex industries and ways of working. What motivated you to start the service that you're working with now?

That's a really good question. So I think when I was in house at Song Trader was sort of my first real exposure to what I would call music tech. Song Trader is a big company. It's even bigger now than since when I, you know, since I left, but it functioned very much like a startup, albeit a well-funded startup in that we were constantly iterating new products, putting products out.

revising them, sometimes they didn't work out and we'd have completely new products. We were also doing a lot of M&A, so there was a lot of product integration. So it was the first time I really had the opportunity to work with what I would say would be people outside of the mainstream music industry, engineers, product managers, you know, very heavy business intelligence data analysts and things like that.

Those are not things, those are not people I communicated with when I was at a traditional publisher or label or anything like that. And I found that I was just really good at translating between the two. I was really good at helping design products that were accessible to rights holders, whether they were accessible to them on the back end, i.e. we wanted rights holders to give us music.

to push music out to a customer, and we needed to create a backend system, a reporting system, a payment system that reflect what their expectations were, or some other thing that we were trying to have a good user experience for. I was good at educating both sides, managing expectations on both sides, and hopefully benefiting both sides, i.e. the product and the company and the right tools at the same time.

So I really, it's a continuation of the work I was doing there. That's amazing. And that's a very sort of nice transition into what we're going to talk about today because music technology and founders of music technology seems to have a lot of issues and especially regarding money. Because you know, investing, well, fundraising for startups is difficult no matter what industry you're in.

And I'm not an expert on all of those industries, but what I know for sure is that music companies really have a hard time translating what they're working on into people who don't know about music. And let's be honest, not a lot of investors do. So therefore it's really, really important, maybe especially for music startups, to know how to get investment, how to craft their pitch and how to craft a narrative. Right now, what's your analysis of what's going on in your music tech landscape when it comes to fundraising?

So I think, you know, my analysis is there's a lot of people asking for money and there's a lot of people saying no. I don't necessarily think that's because everyone, you know, not that, you know, the economy doesn't play a part in the overall economy doesn't play a part in fundraising. Of course it does. But I think that more and more people who know less and less about music are coming in from both sides.

So that's on the founder's side and on the investor's side. And so the matching up gets a little bit more difficult, which is also where I hope to be of service in the sort of matchmaking and sort of knowing what investors are looking for and what they're interested in and being able to place founders with those investors because everyone wants something slightly different. Like I know a lot of articles get published, oh, here are the top 10 people investing in music tech. And then I know like Billboard had one last year.

But when you get into it and you speak to those people, which I've spoken to all of them and I've known a lot of them for a long time, you realize that term is very broad and each one has their sort of niche that they're focused on. One could be AI, one could be, you know, rights and data management, one could be collaboration tools. And so what's happening is people are pitching, on the founder side, people are...

casting, in my opinion, too wide of a net, because they're not zoning in and figuring out who's the right fit for them. And because of that on the investor side, I believe there's a little bit of pitch fatigue because they're getting so much incoming. And that's not like a good cycle, right? Because then when the right thing comes their way, if they're not in the right head space or they're tired because they've already you know, gotten 15 emails that day. You know, somebody who's a good fit might fall under the radar. Now, that's not to say that people are getting matched up and things are

happening. Obviously, you're reading about it. I'm working in companies who are raising money, some who are farther along than others, but that's just like the general, that's how I generally feel, like a little bit of the temperature is. And... It's problematic when we can't get money into music tech companies because obviously any company that has an innovation that contributes to the industry makes a change over time. And we don't want to stop that progress. And especially when the times are so hard, we need some tips and tricks of how to improve what we do. Yeah. You know, can you break down what the key elements of a concise deck is? What is the most important thing for music startup to really get to know about how to approach this? So I think bless is more.

Keep it as simple as possible. The point of a deck is to get face to face with an investor, right? The point of a deck is not to, you're not gonna get an investment solely based on the deck. Someone's not gonna write you a check just because they see a nice deck. But what they will do if they see your deck and they like it is they'll meet with you and start to engage with you and explore further. So I would say as simple as you can keep it, outline the problem.

that you're trying to solve. Outline the solution that you're providing. Outline the profile of the person and or customer or whoever that is that you're providing the solution for. Give very clear bullet points at what you have done so far to solve this problem. Having case studies and showing traction is really important to move, you know, to get that engagement.

and then be very clear about what your ask is in terms of money and what exactly you're going to use it for. If you have all of those things very clearly laid out, I think you have a high chance, if you're in front of the right investor, of getting that next, to go to that next step. Let's break that down a bit, because there's a lot of interesting things in what you say.

I have fundraised money myself, and we have around 25 investments over 15 investors. portfolio of around six companies that we help. And I've started to take out a lot of external clients because I really feel like there's a need for some more support in this area. And one of the things that I experienced is the definition of what's actually a problem. And I have, I see a lot of decks where they state a problem that for me, either feels like a non-problem, or the wrong problem, or maybe a very little nuanced problem. Do you think people struggle with understanding what the

real problems are in this industry? I think people who don't come from the industry do. Yeah, why is that? Because how could you really know what the problems are if you're not living and breathing it every day? I mean, the music industry is such a nuanced industry. It's almost impossible when you work in the music industry to tell somebody, no matter what facet of the industry you work in, labels, publishing, touring, branding, how do you simply tell someone what you do in a day? There's just so much going on all the time and so many different aspects to it. And I think how do you really know a problem unless you face that problem yourself? Maybe I could be wrong, but that's how I feel.

I wouldn't be able to go into like, come up with an idea to solve like a supply chain in the fashion industry because I've never tried to fulfill a clothing order. You know what I mean? So how am I the best equipped person to know how to go in and solve that? So I think there's a little bit of that. I also think that everyone is super focused on like the fan problem, whatever that is, whether it's, you know.

finding new music, paying more to the artists they want to support, getting more, you know, getting more out of their artists that they love. You know, everyone talks about the super fan and that's fine. That's a huge market. Obviously, everyone in the world listens to music. It's probably one of the, you know, biggest, as they say, you know, total addressable markets.

But while they're going to stop these quote unquote problems from the fans, they're not how that affects the artists and the rights holders or what the problems are for the artists and rights holders with their solutions. So I come from a place as a long time publisher of always wanting to make sure that rights holders are compensated properly. So almost everything I see is through that lens for better or worse. So even if someone pitches me something that's supposed to be like, oh, well now this fan can, I really don't know what it is, you know, take a live.

video of a concert and you know turn it into a sticker that they can use as an NFT on their phone. Okay well how does that benefit the artists though? Like lucky you're the fan you get this thing but like it has to work for both to be sustainable. Yeah and it's also you know obviously the whole fan space is what you know the music industry is really hyped about right now as it been with other things in the past. Yes of course. Yeah but also what strike The problem, you know, there is problems, sure, but it really sounds more like an opportunity than a problem per se. Like there's problems in the section of that whole theme,

but you know- That's a good point. Like you could also build products to capitalize on opportunities that are not actually problems. Yeah. That's a really good point. Yeah, you're right. There's some very successful examples. of that in music tech and outside. So yes, I think, yeah, I'm very focused on the problem because of where I come from, but you're right. Certainly there's opportunities out there that maybe no one's thought about before. I mean, was it a problem before Instagram that you couldn't share your photos with all your friends? You know, and things like that. I don't think anyone thought it was a problem, but maybe, you know.

you know, there was an opportunity was seen in the changing ways people wanted to interact with each other. And so, you know, Instagram, Twitter, all these things, I'm not, I wouldn't say those are, those are wildly successful companies that I'm not sure solved any problems. In fact, they may have created more problems that they saw. I think they could definitely be argued. Yeah. Yeah, but it's so important, you know, in whether or not it's an opportunity or a problem where problem probably is the wisest way to go, not just because you can build more clear propositions with it, but also that's what most investors are obsessed about. Like the problem and the solution. Let's go into the solution in two seconds.

Yeah, let's actually go into solutions. Because people might define a problem and it might be a real problem. Who are we to judge right now here? What is a real problem? What are not a real problem? But it's probably evident if it's just in the industry long enough, what is actually true. But then people also come with a lot of solutions. Some of them more obscure than others, some of them super practical. Do you see any tendency on how people try to approach the problems with solutions?

Um, well, I think one thing which I already spoke to is approaching certain problems only from the consumer perspective and not from the rights holders perspective or vice versa. Right. So going in and track solving a problem in the industry that maybe, you know, negatively affects the consumer. Um, so not seeing the perspectives of all the people affected might be like a when we were doing prep for this about pitfalls and stuff like that. Like, without multiple perspectives from the multiple parties that it affects. So like, you could also create a problem

for somebody else if you're solving it. You know, like, it's just that sort of narrow-mindedness, I think, is a little bit of an issue. But that could be more any... Yeah. And I think also, you know, one of the things you wrote in your post is sort of... Don't try to revolutionize the industry. I think it was something to that effect. Oh yeah, also that. Like yes, I feel very strongly.

that I just feel strongly that no one has this like, you know, one shot, I'm gonna fix everything solution to any problem, I'm sorry. I don't, I haven't seen it, I don't believe in it. And I think it's a very grandiose claim to make. And for me, I'm not an investor right now, but I'm connecting people with investors. If someone approaches me saying, you know, especially if they don't actually have, a background in the music industry, like I've got this solution and it's gonna change everything, I'm running the other way. Like it just puts me off immediately when someone

just says they've solved it. You could say, I think I've solved it or I think I've solved a step in the many steps that need to be taken to solve this problem. or I have some ideas about how to solve this, and I'm trying to execute them through my product. But to be, you know, many people literally say, we're going to revolutionize the music industry. What does that even mean? The amount, the tangled web of what the music industry is, I mean, there's, you know, encyclopedias written about it. Like, you revolutionize, like the music industry, you don't, you can't really, no one who comes from the industry would really like, would say that, I guess. No, no. It's a,

We just, you know. Which is not to say we don't need outside thinkers, by the way. We need from outside of the music industry. So I just want to be clear. I'm not saying we don't need people from other sectors coming into the industry to look at things with a different perspective. Of course we do. We absolutely do. But just be like humble and realistic about it. One of the things is that you know, you will run away if you've seen certain things, but also a lot of investors will run away.

And one of the key things for raising money is, well, first of all, not have them run away, but also sort of elaborate on and continue that until it becomes a relationship. And that's one of the really important points that you also point out in your post. Can you explain to me the importance of relationships between founders and investors to get investment? Yeah, absolutely. Listen, I think there needs to be a genuine connection there.

It cannot be just transactional because an investor then becomes a part owner of your company assuming you're going the traditional route of investment. This is not taking a loan and paying it back and then parting ways. So I think you need to build trust. I don't know. I was listening. Oh yeah. I was just listening to a podcast to highly recommend.

to anyone. It's not about music tech per se, but it was, it's Trevor Noah's What's Now. And it was the interview he did with Mark Cuban. And I can't remember how this came up exactly, but Mark Cuban said the one, like the most valuable commodity or asset that a founder, an entrepreneur has, whether it be with their investor or their consumer is trust.

So whether it's the consumer trusting in the brand and revisiting it, or the investor trusting in the, you know, in the founder's vision and the ability to execute it, like, he pointed that out as the number one thing. He didn't talk about, you know, an MBA or a JD or this or this or that. He said trust. So I think that speaks to genuine relationship building and, you know, knowing that you can trust someone to do what they're going to say. Trust someone to...

raise their hand if they're having a hard time and they need help. Trust someone to be transparent if they're not hitting certain milestones because no one's gonna do everything perfectly, right? It's just not reality and things are also gonna fail and that's also okay. But if you can have that open dialogue, which I think you get from having a trusting relationship where everyone feels like they can be honest and transparent about what's going on, that will help you solve problems a lot quicker. And you're always gonna come up against problems,

even if you're, look at all these, these metas, Spotify, everyone, Amazon, Google, you name it, laying people off. These are some of the most profitable companies in the entire world, and they're still facing problems, right? So the problems don't go away. but your ability to solve them, especially, and I'm getting a little bit far away from your question, but my point is just having that genuine relationship and that trust will enable you to solve problems faster. And if you can solve problems faster, then you can move forward faster.

And then everybody gets what they need, including the investor who's looking for a return on their money. Yeah. There's two aspects to it. Trust is not just gained by, it's not easy, right? I think one of the things that I've seen some decks, which I highly recommend not to, is hiding the truth or making it too much makeup on. Like, hey, let's just call it what it is. Let's look at the real problem, the real solution. What do you actually have? And then let's work from that because that is sort of the base of trust. But also building trust or building relationship takes time.

And I think there's sometimes also misunderstanding illusion that you get an intro and then the next week you have a follow-up meeting and the next week you invest. That is rarely the case. Wow. Whoever's done that, please call me and tell me how you did it. Yeah. That's my dinner secret. That's important to remember with, again, we're still fundraising small money, but we have 15 investors. But I think the average length of...

First meeting to investment is probably eight months for me, something like that. That's how long it takes to have that first meeting, to land the investment. And- First meeting for you to land, or meeting for you to give your time to someone you're investing in? No, for me to land. So, with the 15 investors we have in our portfolio, you know, the averages, I met them the first time until they invested probably around eight months. Yeah. That sounds about right. You know.

It's a long time, so people always need to remember, you know, that the work you're doing early in your venture will probably benefit you later, and you can't just look at, you know, each encounter as who will solve my problem right now, which is financing. If I'm here, if I'm around in two years' time, you know, the relationship I create now might still be relevant if I'm good at, you know, catching up and keeping in the hut. Absolutely. And I don't know if I spoke about that in my article, but I think I mentioned it to you before.

Form a genuine relationship with an investor, and it's still not the right time for them to invest, that doesn't mean they're not going to be an investor, maybe they'll come in a series A or series B. You just never know. You've already covered a lot of pitfalls, but are there any other we haven't mentioned that you really want to speak about? What are the pitfalls you see in music tech companies they're doing right now when it comes to fundraising money?

While losing their patience and getting frustrated by the pace. And becoming as a result overly assertive and pushy to investors, so following up too much and just getting too antsy and not giving people the space they need to process what they need to process in order to get back to you.

You don't know what's on somebody's plate, you don't know what they're dealing with personally. No one is at your timeline, on your own, you know, your timeline, and you have to understand that. So I see that a lot. And I spoke about that a little bit in my piece. Like you have to be patient, you can't rush it. It's just, it doesn't work. I think some people would disagree with me. I know there's people who have a very like, systematic way of raising where they.

They go out to everyone and they say, we're closing this, you know, February 30th, if you don't, you know, there's not 30 days in February, but you know, whatever. You know, we're closing this at the end of the month. And if you don't get in now, you're gonna lose, you're gonna lose your chance. And I don't personally believe in that tactic, the, you know, the fear of missing out tactic. I think, you know, it might work on some people, but maybe in my opinion, not the people you really want. Right? You want someone to invest because they, understand the product, they believe in it, they're strategically aligned, and they can add value outside of just the cash. You don't want someone who's doing it just because they're scared they're gonna miss out on the next big thing, in my opinion.

I think there's a lot of truth to that. Yeah, and I think there might be a different world where it works like that. I haven't expressed it either, that the FOMO is good enough augmentation to invest. People tend to be more clever than that. And I think, you know, if there's something I would add, and I've also touched upon it about maybe not being honest in your decks and your conversations, people are clever, you know, and assume it. You know, make sure that, you know...

What you're doing is well thought out, well researched, and really treated super respectfully when you go into meetings with investors, this is also their time. Like, you know, have you tried to ask yourself all the questions they might ask? Yeah, that's a great idea. Or send it to somebody else who's not in the industry and have them read it and see if they understand it. Because outside of poking holes in it, it should be able to be so simple that anyone can understand it.

That's another thing I would... That is so valuable and you know, sometimes I get humbled because I work with this every single day and I, no matter what I do, if it's music or business or pitch decks, I normally run it by my wife and my wife knows enough to know what's true and what's not true, but she's not interested in music, I'm in the music industry per se. And she points out so many things that I wouldn't have done myself because she just has a different perspective. And I think that's important.

That we don't get stuck in our own narrative. Yeah. I don't, yeah, I agree with you completely. Um, and... Yeah, I mean, there's so many things you're saying about like sort of like hiding things or sort of like one thing I've seen recently in a deck was someone sort of alluding to something they had, but then not saying what that thing was, like saying they were a tech enabled type of company, but then not having any information on what that tech was and how it worked, just literally using the words tech enabled. And that stuck to me like a real red flag.

I was like, what's the tech enablement? Like I understand what the business is, but you're saying it's tech enabled and then nothing about technology. But your perspective about the opportunities for getting help, because you know, I think we can, between you and me and probably a lot of others establish, okay, there's need for help here, most likely more than other industries that maybe has a more mature startup environment.

What is happening out there right now, which is interesting, and what should happen more in order to make it more favorable to startups to exist in this ecosystem? So like what should exist to support the startups? Yeah, that doesn't exist right now. That doesn't exist right now? Well, I mean, I think there's a lot of groups popping up for this reason. I don't know if you saw, but Universal Music just announced their music lift. I don't know, Accelerator, Incubator.

I'm not exactly sure what it is and a lot of details weren't released, but it's, you know, in the spirit of working with startups and helping them. I sit on the board, I sit on two boards, I sit on Music Tech UK board, and that's all about helping startups out of the UK engage with the music industry at large. And I sit on it as an American sort of helping to bridge the gap between the UK and here. Also...

I'm on the ADE chorus board, which is Amsterdam Dance Events Startup Program, whereby the first year was this year. We had an admissions process that all the people on the board went through. We vetted the companies and then we picked, I can't remember how many, let's say 10 companies. We met with them in Amsterdam at ADE. We did roundtables. We took really deep dives. And then every mentor was...

Paired with a company to work with them for the duration of 12 months and mentor them and help them. Oh, that's great. Now, I think more things like that. And certainly I'm not the only one out there right now as a music tech advisor. No. You know, there's plenty of us out there who have the background and experience and skill sets to help at various levels.

Who want to be helpful. Yeah. But I do think there's definitely coming more visibility now than it was like, say, five years ago. You know, when I, I've been an entrepreneur for 12 years, but when I really went into music technology, where I did a FinTech music technology company five years ago, really finding the help was really, really hard. And I, at the end of the day, I only found like one relevant advisor.

And I don't think it's because we had poor Google skills. It's just, it was harder to navigate than it is now. I think. Harder than to find the right people. Okay, got it. Yeah. And I think there's a lot of people who have realized, okay, this is an interesting space, but it's also a space where there's a problem for the founders that they, you know, don't have enough guidance and people addressing that problem like yourself. That's, it's important. And it's really important that we as an industry do something about it. If you were to give some advice two entrepreneurs in this space right now, what would that be? I would say one, as much as you can get traction and customers before you pitch to investors, even if it's your parents, even if it

Doesn't turn into actual revenue, you need to show proof of concept at the very least, I believe. Do not get dissuaded when someone says no, you are going to get more nos than you get yeses. That is the nature of the music industry, by the way, not just in music tech. Artists not getting signed to labels, writers and producers not getting their records placed with artists, engineers not getting the mix job. It is a game, it is a volume game.

You know, until yes, of course you get that one shot and then you get more and this and this and that. But, you know, you're gonna hear no a lot, so prepare for it. Yeah. It's okay. It's not personal. And yeah, just don't lose sight of.

Why you got into this to begin with. Like don't get lost in sort of like the quicksand of the acquiring investor process and like make sure you carve out time to continue to work on your product and make your product better and get more custors, more traction, whatever that looks like, because I've seen a couple of founders, like they gather product, they get it to point X and they go out to get money. It's a long process. You just said yourself, it could take you eight months to get something invested.

And so they're spending all their time and energy, which, I mean, it does take a lot of time and energy to engage in these conversations and follow up and provide, you know, the due diligence documents and everything they request, but then they forget about the product and so the product becomes stagnant. And then by the time you've gotten to someone wanting to invest, maybe your product's not where it should be. So I would just say to carve out the time to continue working on the business. I think that's super important. And I experienced that a lot.

That the fundraising aspect, how crucial it is, can also be super, super blinding for what you're actually doing. Yeah, it's important. And I think it's important for players like you and myself to maybe make that easier to navigate. Because at the end of the day, it is the products or the solutions to the problems that are important and investments are necessary.

But they're not the ones who will make the product better per se other than just enable what you need. Oh, it's just money. What's your relationship? It's just money, yeah. Yeah, it just gives you more runway. It doesn't make the breaker product. Like, it's not, yeah, the product has to be viable. What's your relationship with bootstrapping as a startup?

Is that something you have any opinions on? Like, without taking any investment? We like bootstraps. not only roses. Yeah. I can't, you know, everyone is bootstrapped until they get funding. So I'm not sure like what's, what's my opinion on it? Yeah. Bootstrap as long as you can. Yeah. Yep. Yeah. Well, that's a, that's a valid opinion. Yeah. That's a very valid opinion. Great. Well, this is, this is interesting. It's sort of a short concise episode, but I think it's this, this two little, uh, overview of how to approach this as a founder in the music industry. And your post was inspiring.

So I would really recommend everyone to go to Amanda's LinkedIn and read the post. You know, it's from, I don't know, December or something like that. If you want to navigate to that. And we're definitely going to hear more from you in this space and you're quite active with your LinkedIn. So I think you would be a person to follow. If people were interested in using your services and get your opinions and stuff, how would they reach out to you? Yeah. So my site is under construction now, which is not a bad thing.

Because I am just very busy working, but I would just say reach out to me on LinkedIn. I'm super accessible. You know, I respond to every message. Everybody needs help with different things. So while I have all my services laid out on my LinkedIn, I'll say my high level services. You know, until I speak to someone and sort of look under the hood, it's hard to say how I can help them and what that.

Relationship would look like, but feel free to shoot me an own on LinkedIn. My email is also on my LinkedIn account. Email me too. That's great, Amanda. Well, thank you so much for joining the podcast. I hope I get to meet you in person one day. I'll try to go to ADE next year or this year. So maybe we'll meet there. Yeah, I'll see you at ADE. Absolutely. Thank you so much, Amanda. And we'll talk soon. Bye.