Music as a Catalyst: Investing in the Future of Nightlife and Culture

As a musician, it's hurtful that it's being so commodified as that it's just being looped in with this is content. No, it's not content. This is something that should be paid for. We look at what Best Nights VC does as investing in the supply chain of nightlife. We're trying to create community value connecting all of nightlife's potentials and I think music serves as one of these. Nightlife just in itself is a it's a strategic

asset. It's a strategic asset to any city. This whole idea about bringing people together, this is something that music actually does. Sponsored by All Feat, decentralized blockchain solutions for the music industry. Produced by Amplitude Ventures Consulting, partners in early stage music tech.

I talked with Andrea Rosen, an investor and music expert at Best Nights VC. We talked about using music to drive culture and community. From nightlife innovation to scaling music startups, this episode is packed with insights you won't want to miss. Hey guys and welcome back to the Sound Connection podcast. Today, I have a friend on podcast. Andrea, welcome.

Thank you. Thanks for having me. We had really good great time at the Slush Music, which is was the first music version of Slush this year and we were a part of the really interesting music technology part of Slush.

Um you work at a really interesting company called Best Nights VC. So, you have a venture capital firm and I'll have you introduce it and yourself. So, for the people who don't know who you are, who are you and what do you do?

So, hi everyone. I'm Andrea Rosen. I am the portfolio manager at Best Nights VC, which is Jägermeister's corporate venture arm. We invest in the future of nightlife and culture and social interactions. But also, I've been a DJ for the last 20 years. I'm also a producer. Um so, I live and breathe music, nightlife, and all things community and culture.

Mhm. And I think what's really interesting about your profile was to be a part of sort of a VC setup, is your very practical hands-on experience with music. I love the guests I have on the podcast who are part of the investor series have been tangent to music for many years or from the admin side.

And I think we'll use the opportunity today to talk about music from a quite domain expertise side with tangent to VC capital and what works what doesn't work and how does your portfolio look like and all that kind of stuff. So But before I get into that, you have a really interesting story yourself.

Could you just walk us through the your career until now? Like what's been the journey towards Best Night? I love how you say by interesting you mean completely weird off-beat trajectory. Which I think confuses a lot of people, but No, I started I started my career when I was, you know, in Tel Aviv. So Tel Aviv is basically like a startup within itself.

You don't have this formal European training of saying, "Hey, we go to business school or we do this or we do that." It was more, "Okay, I needed a job and I found someone who hired me because they're like, you seem really cool. You can do community management." And then it just sort of spiraled from there. So that's I kind of got into startups by accident, which I think a lot of people find very strange especially since moving to Europe, but

that's just kind of how it went back then. And so I was joining a bunch of startups early on, learning the ropes that way, and one of the startups that I joined, I joined in the founding team called Eatwith. This was back at the sort of the height of the sharing economy in 2013. So Airbnb was just lifting off and being really

cool and so was Uber and then Eatwith was sort of your Uber or your Airbnb for social dining experiences. And besides the fact that I got to eat a lot of really good food, um, I also learned a lot about what it meant to open up global markets, to scale, um, a very, very small startup, and also what it meant to raise a series A, and

eventually what it meant to exit. Um, so it exited in 2017. And, uh, since then, yeah, I've been, um, in the startup and innovation world, joining, uh, different types of startups, different sectors, uh, learning the ropes as I as I go along.

But, music, of course, is always my heart and soul. And describe your heart and soul there with music. Like, you've been DJing for 20 years. How does that look like for you? Now or back then? Well, yeah, back then and now. Okay.

So, I mean, how it kind of started, I've been collecting records since basically since I could talk. My father, uh, was a record collector. Um, every room in the house was filled with records, pretty much. So, this is something I grew up with, and then my cousins were, uh, wedding and bar mitzvah DJs. So, they were always, you know, fooling around with the turntables in the basement, and it never occurred

to me that I could be a DJ. It was just not something girls did back then, or at least not, you know, in my world. So, it was just always something that I played around with, but, um, I was still so into the music, and I had older, uh, DJ friends, guy friends that were like, "Hey, you have really good taste. You should You should learn this." And so, um, they were teaching me the ropes. I was getting good gigs in really good

clubs back in Tel Aviv, and, um, yeah, just sort of spiraled from there. I think professionally it started, you know, more in, you know, early, uh, yeah, like around 2000 2008, but I mean, I've been playing around with vinyl since way before that, and, um, you kind of think as you get older, "Oh, maybe this is it. Maybe it's done." But, no, I think I think I'm only just getting started now. So it's

it's really exciting. I think what's really interesting is looking at today's conversation from the love of music but then also separated that from the investment potential of music because of what I would love to talk to you today is about investment. It's about how you look at the music industry in particular how we look at specific

companies. What are you guys looking for at Best Nights but also if you look outside the scope of Best Nights like what are general commentaries about music? Um I think we had a had a really interesting conversation and I made a statement before our call and I said I wouldn't put it in the podcast but I'm going to do it anyways.

We talked about being exposed to the number of startups out there and I think I feel like I'm pretty well informed about what happens but what I've been sort of exposed to the last couple of months is I've been I'm a part of these networks also Music Tech Europe Academy where I'm a mentor where there's a lot of startups being you know selected and presented and I see more and more of the

most of the startups out there I don't know and I know hundreds of startups. So first of all it's really interesting to see there must be a lot more startups than I first assumed when I really went deeply into this space. But then the actual comment I made is what I also see is in general I believe that the quality I see of startups and founder teams seems to be stronger outside of the music communities. And

what do you mean by music communities? Uh the check the tech constellations in the countries the conferences all that kind of stuff. And not to say that's a bad thing. I'm just saying it's a really interesting observation. But I think the music industry seems quite fragmented when it comes to the startup environment. And that might also have its ripple effects.

I don't know why I said that I just wanted to have a talking point in the conversation talking about the potential of music startups. Is this something you see as well? Or what's your angle? Yeah, absolutely. I think first of all, we're dealing with a industry that's playing catch-up. You know, I think there's when it comes to the tech startups and things like this, you're dealing with a lot of traditional founders in many ways

that were going after, you know, big tech that had solutions to, let's call them for lack of a better word, real life problems, not nice to have, even though I think music is essential, that they were trying to solve. And so, there was just sort of a different way of dealing with things. And as music tech has started to sort of build into this more mature industry, it's still we're still far behind

further behind than when it comes to other traditional um uh industries there. We're still just, you know, a bunch of kids playing drums or with vinyls that are trying to figure out our business models. And um for I guess for that computer explanation around that, and you know, something I saw a lot when I was starting in the beginning of doing a lot of climate tech, because I also worked

in this sector for a bit, is that um at the very beginning of climate tech or a lot of tech that has, you know, a social good or things like this, a lot of the ideas around it should at the beginning were sort of like, you have to measure it differently than you measure other um other companies, because, you know, they have very different metrics, they have different things. And

to an extent, I agree with that, but at the same time, you know, it's still an entrepreneurial space. And any startup that's not thinking economically, you know, at least long term, um even if the short term is not, but at least long term is not thinking economically, is not going to survive because it's not uh um you know, we're not looking at nonprofits here. No nonprofit is going a VC case. So, I think it's the

same when it comes to music. And what I see a lot of times is that while I'm very interested in non-traditional founders or people that have never, you know, been founders before, they still have to learn the right way to pitch their company.

And uh And I don't mean this from the traditional, "Okay, you have to pitch in 30 seconds or you have to do this or you have to do that." But, you know, we go you and I we go to so many different conferences and we meet a lot of people and how many times after 5 seconds are you either completely don't understand what the person's saying or you're really bored by it because they don't really know how to shape what they're saying. And um

this is why I like what we're doing at Best Nights VC because there's so many different angles to it. Music is the catalyst, but it's not the entire thing of what we what we invest in and we are looking for founders that in many ways know how to tell the story. They know how to really build that narrative around the community aspect of what it means to bring people together in real life.

Mhm. You said a lot of interesting things there, but I'm going to I'm going to just point out two things. I'm going to start with the first one. Um there sorry what you just said. You said real life problems. Uh that music you basically said the music isn't real life problems, which I totally agree with. Um but could you could you dissect that for me at least just from an investor standpoint and the potential. What do you mean by

that? Yeah, I only say this just because I've worked in so many different sectors. So, for instance, um you know, we were dealing with in let's say the sharing economy, people were looking for new business models and new ways um to get around by car or to get around instead of hotels. Or for instance, when I was working um

uh as a partner of Volkswagen and in buyers, so we were looking for a lot of, you know, different mobility tech, energy tech, health tech, things like this that were solving sort of your everyday, um, real-world problems, and it's not that, um, music doesn't have its problems, cuz it does, um, but it's very different level, and I think that the way uh, music entrepreneurs have to learn how to describe these problems, they have to

actually be problems, and so I think a lot of what we see is solutions that for problems that don't exist. And this is also, um, something that we, as investors, I mean, you see this in every industry, but I feel like I see this more with music. Um, so seeing less solutions for problems that don't exist, and more thinking about what actually are the problems. And, um,

I think what's interesting is now that the industry is starting to mature just a little bit and a little bit more and a little bit more, the problems are starting to become very obvious, right? So, um, we know that there's a lot of problems when it comes to music rights, licensing, ownership. We know that there are issues in general with, um, how to your ethics around how, uh, music

is made or distributed. Um, we know that there are issues with monetization. So, you know, that there's, um, the problems are becoming way more scalable and obvious, which should make for more interesting entrepreneurs in the space. Mhm. Should.

Yeah. You also said something really interesting, which is you said music as a catalyst, and, um, you also met my business partner Taj, who doesn't come from music, and most of Slush he talked about the concept of no one is paying for music. And what he meant by that is obviously someone is paying for music is we were sitting at a cafe with, uh,

a producer friend of mine from Finland, who I believe is one of Europe's best producers, um, but he is struggling, well, not struggling to make a living, he's making a living, but like he should be doing much better than he does, uh, and we talked about music instead. And Taj he said, you know, "I'm drinking this coffee. I paid for this coffee. The person who made the bean in Ethiopia planted a seed with a very clear

expectation of getting paid right away. So, I as an end consumer directly purchase this coffee that's made from that bean and there's a very clear value chain. Um I'm not paying for the music playing in the background. Yeah, well, somebody's paying for music. Sure, but me as a consumer, I'm not paying for the music. And he argued that is the fundamental difference of the economies that there's very few places in life where people consume

music where they actually pay for it. Um and it sort of speaks to the concept value music and all these kind of stuff and the whole value chain. But what you said I think also plays off it is that it music as catalyst for something. Um can you again, I just put some words in your mouth, but I just wanted to give my own personal angle from it.

What do you mean by that? What does it music as a catalyst mean? Yeah, I mean, we look at what Best Night Cities she does as investing in the supply chain of nightlife. Um we're trying to create community value connecting all of nightlife's potential um with all these broader community topics. And I think music serves as one of these. Nightlife um just in itself is such a it's a strategic asset.

It's a strategic asset to any city. And you know, we're seeing a lot of issues right now in the UK with the nightlife scene. Um we're definitely seeing the closure of clubs here. I just played uh at one of Berlin's best clubs or most well-known clubs this weekend and it was half empty. So, we're dealing with some major issues um in the nightlife scene.

But it is essential to making cities competitive and even attractive uh for top talents, especially innovators. And um yeah, and this whole idea about bringing people together, this is something that music actually does. And so, it is it is of course as a musician, it's hurtful that it's being so commodified as that it's just being looped in with this is content. No, it's

not content. This is something that um that should be paid for that um that is you know it is developed and this is why you know there it's great that there are more and more specifically music tech investors because I think that you need people in the space that really understand it and we see ourselves as sort of complementary to this. We don't invest directly in the music making process,

but we invest in the music as a catalyst for nightlife. So the idea of what are the music startups that are bringing people together socially and that's what we actually invest in. Mhm. You have two investments in the music space right now that are directly music and obviously music would be a part of probably any startup you have.

But for those two investments, could you dissect for me uh what do they do? Sure. Uh we are invested in Un:Herd which is a UK-based startup um made by the brilliant uh Alex Briese and uh the startup is basically your music marketing platform in a digital app. Uh so they have uh both scalable and

bespoke services that they do. Uh you're able to really target who and analyze who would listen to your music and be able to promote your music um in many different ways either through targeted ads or playlisting. It's a way to help you as an artist uh go viral with the music that you're making.

And what's incredible is that Alex truly believes in the artists that he has there and he works so hand-in-hand with a lot of them that he has on there that I think um it's a one-of-a- kind in the space for sure. The second one is uh Soundbox and Soundbox is a Danish app. It's been around for uh almost 10 years you should know Right.

as a as a Dane um and yeah also uh the founder Jasper is extremely committed to the work that he's done and um you can tell he brings all the fun and the play into Soundboks and the idea is it's a really cool speaker that brings the party anywhere. It democratizes the party. It democratizes your um social experience and uh I was actually living in Kenya for a little bit before

I joined uh Bestnights VC. Um that's the first time I heard of Soundboks because we were building festivals and parties in places that uh were really hard to get uh electricity and we were connecting Soundbokses together and charging the batteries with solar power and building these incredible experiences.

So, I'm very proud of these two companies. Amazing. Uh I don't know what Jesper myself, but I do know a Soundboks very well and we just recently had dinner with Alex Teeler. So, so he's a brilliant founder um and I'm going to say something. Um Alex is a brilliant founder.

But they I believe without offending anyone, I think they're few and far between. Uh in music tech. Mhm. Uh and is that something you see as well? Like at that it's really difficult finding that traditional tech founder with that hunger and approach that Alex might have?

Oh, definitely. It's really hard and this is why um when we find it, even if it's not you know, polished or perfected, we still want to nourish it. So, there's definitely been there's definitely been uh founders that have something really cool, but they're still lacking this.

Yeah, this understanding and we'll still we'll try to have patience and try to work with them on it just because uh these things are so these types of founders I think are quite rare for sure. Um and I think also we're looking culturally. I mean, we're investing in everywhere at this point. So, um we can invest in 150 countries because Jägermeister is based in 150 countries.

Um most of our investments are in Europe and uh the US. We just made our first investment in Africa. Um we're quite keen on the emerging markets, uh which is also about quite interesting and I think that this is where we're going to start directing a lot of our energy is the not this um European um mindset always, but also how can we see where all the trends are for nightlife,

which is not just happening in Europe. And I think when we all when we do say we're looking for this you know, who are the founders of the future, it doesn't have to be, you know, oh man, I'm going to offend someone here, but it doesn't have to be, you know, um that typical person walking around in a Patagonia vest or gone to this school or this thing and uh I think I think that's what's really important because also that's how I also know the

industry, especially coming um from the Israeli side of things is that, you know, a founder can be anyone, a founder can have all sorts of experiences and that's uh really important to building up the narratives and the drive that they have. Mhm.

I think that's really interesting. Let's stay a bit with the founder side. I'm going to I'm going to just refer to a article written on Music Business Worldwide with one of my close friends, Vicky Nauman. And she uh brought up this uh concept of um industry market fit, which I thought was a brilliant uh formulation on something very specific. So, so every founder would know the concepts of

product market fit um and, you know, most founders would also very well understand what investor market fit uh would mean. But then there's also the concept of industry market fit. And what I think is really interesting when it comes to uh founder profiles with um with both background, but also personality is that the combination of those three, uh I think it goes for any industry, but

I think maybe in particular some creative industries has a very strong inherent culture aspect to it that also plays into play is that you need to know how to speak to investors. You need to know to speak how to customers, but then you also need to know how to speak to the industry.

And I think the industry Yeah. And the industry uh many times can be almost the opposite of like industrial market fit for example.

Like there's not a lot of lot of common denominators and you almost have found a need to be able to switch between personalities in order to navigate that specific thing. Does that ring a bell? Like did Yeah, too. I feel seen. Um yeah, because I feel this as you know, someone in my role as well and I get that from the founder role, but also at

Bestnights VC because you know, I'm one way talking to the corporate side of things. I'm another person talking to the artists and creatives about what we do and what Redger Capital is and then I'm someone else talking, you know, to the founders. And so you have to be sort of these split personalities and know how to translate uh different mindsets.

And so you know, a big part of my role is being the liaison between um the portfolio companies as well as uh what we're doing um inside of Yagermaister. So I have a holistic view at Yagermaister and I have a holistic view of the startups and trying to find all the win-win uh opportunities, but um you know, I constantly find myself translating between the two sides about what they're trying to say to each

other. So this is very important that you can be a chameleon in this industry. Yeah, and I think I think beyond the market fits of those three, product market fit, investor market fit, and industry market fit, I think um the domain expertise in how real it actually is that you have your

uh foundation each of those are quite important. What we consult a good deal of companies and I never really mention any names, but we had one particular company we talked a lot with that is in within a very non-musical space within finance and they're telling a very uh strong music story.

But at the end of the day, it's clearly that you guys don't come from music. Like it's so like if you don't nail all three, like stick to the ones you know. And I think the best often times the best case if you do nail all three um and maybe that's where founders such as Alex, you know, maybe stand strong. He doesn't come from traditional uh finance background, but

but what he is, he is a very strong founder and an investor perspective. And that makes sense. Like there's certain criteria we'd be looking for where he would score very high from an investor perspective, but then also his music industry uh experience really makes him I call him an industry darling, which I believe he is.

And then Yeah. And then product market fit, like he knows what he's talking about. Like this is not just some new thing. Like it he has all those three elements and I'm wondering that might be the things that people miss out on besides the concept of market fit, but also the founder fit within those three elements. Does that make sense?

It's a very good point actually and um yeah, there I think of course a mix of experiences uh make, you know, the product and make uh the story you're trying to tell, but if you have no passion or no narrative towards what you're trying to solve, then yeah, it's not going to it's not going to work.

Yeah, and actually all honesty, that's what I'm struggling with. So I believe I would by now have a really fairly good investor market fit when it comes to understanding the lingo, how to approach, how to how to talk about what you do, and I know I have a I would say very strong industry market fit, but I struggle with product market fit. And not just it for the case that I'm more of an inventor type.

Right. So, like I never really have the end user in mind that much because I don't really care. So, oftentimes, you know, if I if I could just create stuff, you know, invent stuff within commercial perspective, I would be happy. And I'm happy. Also, some of the things we don't make money on and they got I'm fine. I love this. But again, that's not how startups should work, right? So,

that's my biggest struggle. Sorry, what did you say? Investor's worst nightmare. Yeah, yeah. I know. And that's my issue. And so, actually, you know, because being very aware of these three things, that's what I'm working on. I'm trying to be much more bullish on having the end consumer in mind.

Um because at the end of the day, you know, I'm running a business. I have plenty of employees all around the world that working on different things. And I need to pay salary each month. And uh I have my own kids to take care of. So, so I think I'm trying to live by what I just said and say, "Okay, I need to I maybe have a bit more of an untraditional thing I'm lacking." You know, um but that's what I'm

working on. Um But when it comes to sort of product market fit in music, uh let's just get there because a lot of founders, as I see it, has a very uh sentimental approach to building startups in music. Like, how do you see that?

Yeah, I think um Slash that we were talking about was actually a very good example just because uh you know, when you're talking, a lot of the founders that I that I talked to, I felt like um were so emotional, let's say, about what they were building that they weren't seeing the challenges. And as an investor, I'm going to, of course, you know, challenge um not just an investor, sorry, also in

my experience both in startups and also music, I'm going to challenge a lot of um you know, the potential red flags that I see when it comes to anything, but um a good founder, and I we talked about this before. Uh As a founder that's going to succeed for sure is someone that's also willing to learn, willing to listen, not take everything

that the that the investors say and say, "Okay, I'm going to change everything." Because you need backbone, of course, and you need to know when you're right versus the other person, but at the same time, um what every founder doesn't realize is that as an investor, we're seeing, you know, like hundreds of companies. We're screening hundreds of companies all the time. And so, someone will come to me and say, "We are revolutionizing this." And I've seen 20 companies that are

basically doing the same thing. And so, if you can't tell me how you are different in a non-emotional, in a factual way, um not just with adjectives, but give me the facts. Give me something that's um that I can either prove right or wrong, not, you know, as an opinion, um then it's a it's definitely going to be a bit of a red flag or,

you know, almost like it exhaust us as investors. So, um I saw this uh a bit, you know, recently at the different I've been to so many conferences in the last couple uh months because of, you know, different speaking engagements and things like this. And um I what I was really inspired by actually more than the startups that I met. Oh god, I'm going to get in so much trouble, but more than the startups I

Met were the investors I met. Um I actually, you know, for the first time in a long time felt like I was meeting investors who were really um had that mindset that I was looking for a very long time. Um that also saw you know, the emotional but still clear sides of what music brings and music is an emotional narrative. It's not

You do need a good business model and you need all these things but it's the drive is so much different than other tech and we were talking about it a bit at the panel that we did at Slush and um this is a it's a very different driver and so I was very impressed to see how many how many more investors that actually are out there that are

Interested in and feeling in the same way because this also means that this like-mindedness will lead to better investments joining up together better syndicates and even now I left so inspired you know I'm talking to different people to say hey who are the investors doing this or that and in general we talked to so many investors at Best of Next BC on a daily basis anyway but looking even more specifically to very certain topics or

Things that even I'm not looking at just to know who they are so I can introduce them to founders and I think building up this industry in a better way because it's slow but it's happening. Mhm. Yeah, that's what I'm seeing as well which is quite interesting. Like what I what I haven't figured out yet is to what end. You know, I'm I'm

I'm trying to study as much as I can like the upsides for investors in this space. And actually what I when I talk with investors myself um from this world especially in Europe doesn't seem to be a clear answer there.

Like you know, I've also been not many people know this but I'm finishing up my second master's now which I shouldn't have done it's too busy of a side of my full-time job and so time for this? I don't know. I work very effectively. Anyways, so I'm talking pretty much 2 years on music tech financing.

Um Yeah. And I've done a lot of work in this space and what I can conclude so far is no one has numbers. And the people who might have numbers just aren't public about it and I've now going to access to some sort of numbers that I some you know, I need to consolidate but I you know, after studying 2 years, you know, both in academics um and just also

As a professional I can't really see the metrics. Uh I can sense that there's certain um attractive things about music tech investment. But there's no specific proof points I can point to from a from a uh tangible um source.

Um My question is everything is venture cases and I discuss this all the time, you know, with other people on the scene and this is we're sort of at this weird place that I think education needs to be more prominent and not just Oh, and we can't get investment because investors don't get us or this or that. It's actually there needs to be something built up about how or real education in the space

For what actually warrants an investment. You know, there's just stuff that's not super scalable but really good businesses and that definitely doesn't need um you know, traditional VCs as they stand. Maybe an angel if it makes sense but not traditional VCs. But what does it actually be to be a scalable business to warrant that?

Mhm. You know, that actual venture capital. What is it and this is something you know, we look at all the time at Backstage VC. Is this a VC case or is this just a good business or is this just that doesn't that doesn't need this. Um and then we can partner with them in some way and we can mentor them and that's where I think it takes everyone in the space to sort of think about it this way and not just write these companies, but say, "Hey, you're a really cool business.

Let's talk about partnership. Let's talk about what else could help you, but it's not investment." Yeah. And what's really striking is, you know, of the of the VCs in Europe that are outspoken about music, there's around five or six. Uh and, you know, I wouldn't I wouldn't have the numbers on other industries, but I'm pretty sure that must be one of the lowest numbers of any industry in

Europe when it comes to VC representation. Um and then that just speaks to um it's a type of different for music. And, you know, coming back to education, you know, the traditional uh founder education, both, you know, academically or accelerators or, you know, self-studied, there's a lot of rules and podcasts that talk about all

This kind of stuff. And, you know, I've been looking up, you know, as much as I can. And the truth is, like, a lot of it is really good learnings, but it's just not applicable directly. Mhm. Um because, for example, in VC, you know, one of the one of the most important parameters you can dissect yourself is, obviously, what you believe a company's potential is. Uh

And, you know, when you when you see from a from a portfolio standpoint, you need to have fairly big uh potentials on market share and revenue and acquisition potential in order for it to make music a interesting investment. Can you Can you Can you dissect for me what does that actually mean? So, when it comes to potential, what does that mean for music and why might it not be hitting

The mark? Well, it's also different for us at Best Nights VC than I could say for other traditional investors and probably the reason why that there that there are a few. Um so, let's start with, you know, with us. Uh Our metrics, our framework is quite because we are a corporate venture capital fund. Um our focus is also on

The social impact and not just financial return. So, um that is an important part, but we are the way we view everything, our whole framework is entirely different than um traditional or other uh venture capital firms. Um And I think in as a whole, I mean, without sounding entirely negative because this is still a very positive industry, it's still very broken.

Um the way we consume music, it's distributed. We touched upon this earlier, but it's extremely broken. So, investment for Band-Aid that sort of fix even part of the problem, um it's not such an attractive case and that's why it's still an industry that's really small. I mean, I think um let's take for example the uh

The company that came out from DVS 1 uh a slice. This one, you remember this? Um great idea, hyped up, um in the end, you know, adoption is still quite slow and uh DJs themselves, they make very little money, yet they're expected to give some of it back to the producer. So, you're looking at something that's so broken, yet who gets blamed for the downfall of a slice? It's the DJs that are that are

Blamed because they didn't want to give uh their fees back to the producer when they're barely making, you know, enough for themselves in general. So, maybe we should go to the source of the problem, like we were set before, you know, how coffee's made and how all of this is done and who is expected to pay for what. It's the same thing with music.

The whole system is uh entirely broken and I think this is what we're starting to do on a you know, on a very tiny level is start to pick apart these pieces and try to fix them. And I don't think we can expect it to happen overnight, but this is why we're starting to see more and more music tech, we're starting to see more and more in investors and it's still rather slow and really small, but

This is why it's not scaling to that level yet because there's still too many problems to sort of dissect and fix. So, what do you believe is going to be the most important thing startups can fix in music to uh make it more attractive, and how long time do you think that's going to take?

I will quote you on this. Uh Really? I'm going to quote you. Fix the boring problem. Not the exciting one. This is a quote from you that I really like, but it's kind of true. Uh I think about the most basic problems here, and don't try to solve uh everything, and think about, you know, what um what can make the that

Best impact, but in terms of timing, ooh. I don't know. I think we're going to see the next 5 to 10 years taking a huge hit, but also really exciting time with how AI affects uh everything. And then, once this sort of regulates, uh or self-regulates, or gets to a very interesting point, then only then I think we'll see a lot of this

Scale a lot further ahead, but I think it's going to take several years for sure. Mhm. I feel that's a positive outlook, by the way. Yeah. Well, I agree, and I have this uh So, when I started out Anthem Venture, which I which I lead now, we started um 4 years ago in a month or two.

And I had a very ambitious plan of how to sort of build this company, and I think I said, you know, exit in 7 years like 4 years ago. Obviously, that's not going to happen. Um so, a few years from now. But I have said something new, which I which I actually believe in, and there's a few reasons. Um last year I decided it's going to be 15 years from now. Um

And it as a startup that's not a great thing to say. Obviously, I have a few nuances to that. But sort of our model over time is portfolio ownership. So very much like an investor, we just are from the builder's perspective. Um and I honestly think that in 14 years from now, I'm saying 14 years because I said 15 years 1 year ago.

Um it's going to take the time for us to be operating as a market leader in an ecosystem that works within startups and music. Zoom. Uh because at the end of the day, you know, if there's any point of buying whatever we've built, it needs to fit into an ecosystem of things that works. You know, it cannot just live by its own.

And I think it's going to take a long time to make it more attractive to be in the space. But then again, you know, on the flip side, I have I have several friends who've sold companies in the space or who have had acquisitions offers in the space.

And it's been um quite amazing. But they're all under NDAs. You know, they were not even allowed to tell me, but I'll be quiet. And that's also the sad part because, you know, this is not getting out there. So it doesn't really inspire other investors.

You can't really use it in academics. You can't really showcase them other numbers. So I think it's just problematic because I the chicken and the egg scenario like one of the my angles is like, okay, if one of the solution could be being transparent about what actually worked.

You know, how much was the investment? When was it at you know, at what stage? When was it sold? At what at what number? What did the founders get? What did the investors get? So like an actual dissection of the whole flow of investment to acquisition, but also from investment to fail.

This is long term. That's long term, but and I think that's going to be one of the pieces because you know, you as a VC might have a clearer sense than most of what that is. But again, it's not consolidated information. Um and it's just one out of I don't know, 10 15 major issues that could over time be addressed to make it

A better place to get investments and better place to be acquired. Um does that make sense? Absolutely and um I mean in general even at Best Nights VC, you know, when we invest we're always thinking about what is of typical investors we're always thinking what is the exit strategy at the end and so it's not something that we overlook. Um but I think also in investing in music tech also has the

Same sort of outlook that I think about when it comes to the issues as a whole in the let's at least in the European in investment sector. So, um I think we have to stop looking at early stage investments as trying to find the least amount of risk.

You know, we're not bankers here. We are investors. Um the whole idea is to place a lot of bets into and to mentor and to um you know, scale up these relationships, nurture them and try to build as much of the ecosystem as we possibly can without you know, oversaturating it and uh um it's not always what we see here. We see, you know, a very banker focused

Approach a lot of time when it comes to investors. Not Yeah. I'm not speaking directly about the music tech space because it's it definitely less in the music tech space for sure than other sectors, but I think the reason people got into this music side in the first place especially from the VC side and most of, you know, who we know they have sort of that music side as well. So, they know what it takes and they're in it, you

Know, because of it's their heart and soul as well. And more and more we're starting to see people going, "Ah, maybe there's some good ideas there." Or you know, Yeah. um we're seeing some of these acquisitions and we're seeing things and like even though they're few and far in between, everyone wants to be that person who's on one. So, or wants to be that VC that has done that.

So, um it's not the most obvious industry. It's definitely a way more difficult one to crack. Um that's why you know, we focus on just one piece of it uh as far as our investment thesis goes, but um the trends sort of speak for itself when it comes to different sides of it. Uh we saw what happened during the pandemic

When it comes to music tech as a whole. And I think that this also just shows where that this is going and um what also are the major blockers that are getting in the way. And like we touched upon before, the more we sort of commodify this as content and devaluing it, uh this is one of the major blockers that we have to solve.

Yeah, I'm writing a few articles about this and I hope to post them on LinkedIn soon because you got to start somewhere of sort of dissecting it. So, I've written three articles on music tech financing so far. Uh what one of the things that I'm really um practically uh looking into is what you mentioned uh the amount of tickets. You didn't say that directly, but you basically said

that you know, that there needs to be several investments in order to really understand it. And I and I had a talk with Thierry from Media Deals uh who's also a co-founder of Music Tech Europe. And he said something really interesting is um when he talked, I think that was Thierry. Anyways, when he talked with VCs who've had previous successful music tech investments

and they're asked um "Why is this not something you're pursuing in general? They say, well, we invested because we like the founders, but it's not a repeatable thing for us. Like we the market in itself is maybe not that interesting and even if it was like the access to shared investor knowledge and what to

look for and how to validate stuff things are just too limited. So it's not like, you know, if you go in new energy is G medical, they would see hundreds of companies and you would have investor specialists that would know this really well. But like within music it's that most of the metrics you can look at, okay, do they have good financial projections? Is the market like fine enough? Do they have traction? The

founding team great. But the whole domain expertise that really gives that due diligence confidence is just really hard to access. Absolutely. What he pointed out, and it might be someone else, but I think it's actually theory, but was that he um because it doesn't happen at scale.

There's not enough tickets. There's not enough investments. Like also within like consolidated environments, that knowledge transfer is just really struggling. Um so music might be attractive, but you know, how can you how can you repeat it? Well, you can repeat it through quantity.

But if you don't have the knowledge, you can't risk that because there's other places where the both the potential would be higher and the risk would be lower because of the data domain expertise that's behind the investments. Um does that make sense? Completely. 100%.

So um I'm not announcing on the podcast because it's still a project that works. It's something that right now has a relative amount of momentum is we're trying to set up a syndicate of successful um founders that have exited in the music industry in order to really focus on the vehicle with having a lot of small tickets. So that's sort of what we hope to set up next year. Um if we will

we won't, you know, people will know about ideas around that we can we can talk about. Um and I think that could be really interesting to see because based on our research that is one of the most evident reasons why there's not a lot of um success in music tech investments is because you just need to treat it like any other industry. There needs to be multiple tickets. You know, you can't

just you can't just make one bet and based on that make a decision. It doesn't mean anything. Um I agree. We need to see multiple bets. We need to see more deal flow. We need to see more sharing. Um super important.

Yeah. So, we a lot of what we're doing at Best Nights VC. Like we're we are sharing deal flow regularly. We're talking to as many investors as we possibly can. Um we're talking to also investors that maybe overlap with a topic that's not exactly music. It could be let's say gaming or entertainment that sometimes overlaps with the company that we're talking to.

So, you know, as much as we can try to find all of the stuff that we all share. I think it's super important for the industry. Mhm. This one concept that um in connection with the coffee example in cafe with the coffee bean uh again, my I'm just referring to my business partner Taj uh is something that we like to use and it's not completely correct, but I like

these simplified statements is that music sells anything but music. And depending on who I'm mentioning it for, I get a lot of pushback or some resonance. But the whole concept is as of now and probably also in the foreseeable future in most cases music needs to exist in the context of other income sources as well. Like you need to count it in

other industries, other products, other synergies than just music it And that's basically what you're preaching at Best Night VC at least your focus. Could you dissect for me what that might mean like for startups? Like what startups might not be utilizing that fully?

Community I think is the big biggest aspect of it. Um and community is one of the biggest things that we you know that we're looking at and when it comes to music it's also one of the main reasons that I love music so much. It's the community that it brings together of sharing the same ideal about what you're listening to and what you're hearing and um I think fan engagement in

itself is a topic that no one has really cornered the market on. Um this is a topic that we definitely look at uh quite often and it's something that I see a lot uh in terms of what people are trying to build but haven't seen anyone quite nail it uh but still quite early.

So I think the market is open here. Um yeah as a whole I think uh everyone says that tech is there to scale everything but not everyone is solving the right problem with tech and I think that itself could be could be something uh different uh that people focus on and

for sure uh when it comes to utilizing you know what is um what is not I guess being utilized it's everything around the music everything that it's a catalyst for. So your community that we talked about but what is the music being used for in general? Is it you know a running club?

Um is it uh a dating uh social event that people are getting together? Is it your Best Night um at uh let's say you're traveling to Brazil and you're going to Carnaval um and you're experiencing culture through an event.

Um is it a festival that uh that you're going to so you can see your favorite artist and be with your friends. So, um for Best Nights VC's perspective, you know, this is why music is the catalyst and we're looking at all the things surrounding music that people are sharing together.

Uh and not just specifically the music itself. And so, this is why when we talk to other music tech investors who are invested in really the music-making side of it is a very different outlook. Um sorry, music making and music distribution. It's a very different outlook than what we are looking at it at Best Nights VC.

Um and I think when you're really in the sector, um you're seeing the really nitty-gritty problems from the other side of the perspective and that is, you know, everything is so democratized now. It's so broken that it's hard to make that scalable. And I mean, myself as a DJ and still playing, you know, regularly and making music, you know, um

it's wonderful and I still consider this a professional part of my life, but it's so democratized now that uh that, you know, even though I play vinyl and do other things, it's not something I could personally live from unless like it's you're hustling nonstop. So, uh we're I think that there's uh people that are really trying to live

from music and making music. This is a huge problem that people are trying to solve on the tech startup side of things and that's not really there yet and I think to understand where these problems come from will be the next step to actually being able to solve them rather than just trying to put in a this is a platform solution that connects, you know, this side with this side.

These are it's great. It's a great start and this is how every industry needs to start, but it's not what's going to scale. Yet. So, you've now been in the investor space within music for some years. Um I'm very curious to hear uh do you believe there's investors?

Because I've been provoking a few investors with an article I wrote uh where I said there's no such thing as music investors. Uh and you know, I think that's partially true and mostly true. But what I'm really um what I'm really uh encouraged by this talk today is I think you've multiple times um talked about deal flow uh and sharing

and hearing investors at conferences speak. Could you for the listeners and for me try to give a guess on how many I know that's it's a hard question. How many people and companies are out there that are actually looking for music tech investment in Europe? And how high of a quality investors are there? Like is there actually an environment? Is it coming? Is it current?

I Can you Can you help me understand that? I think a very specific straight music production, music distribution tech is still very small numbers. Um and it's definitely not at the place where we'd say, "Oh yeah, that's the deal flow that we're getting the most traction on when it comes to you know, uh co-investments or things like this." But it's also not what we're

what we're bullish about looking at. But when it comes to how music is a catalyst and sharing that, you know, through deal flow and what that touches upon where it strikes a chord, no pun intended, with other uh investors.

That's something we're seeing a lot of traction on. So, when we can connect music to another area or another space that is that is definitely easier for adoption. Uh hence the deal. So, you would say that the space where music is a part of something else, there is investors.

Correct, but anything where it's like when we divide just the very strictly music tech into production and distribution, this is still very small. But, on the positive side, I mean, it's so it's even it's so much bigger than it was, let's say, even 10 years ago when I was first going to

mentor and speak at Sonar +D and meeting other people in the space and you really had to be like this, are there any investors? And now, you know, there's a lot of people claiming to be investors that maybe they're not still not doing it, but it's still the numbers have changed completely in the last 10 years.

So, it's slower to catch on, but it's happening. Yeah, one of the one of the thesis I have in this space also when I talk with startups is that it's really hard and probably not a good idea to have a model that's focusing on B2C to artists or B2C to creators where your audience is artists or creators. I think I know

Alex and Anna her does that, but they do it particularly well, but I would also say they're an exception out of many cases where that actually has potential. And because when you operate on a on a traditional B2C methodology to a market that is so incredibly small with very little um

power to pay um it's hard to see from a practical theoretical investor level how that's ever going to make money. It's going to make sense to sacrifice it takes to be a founder beyond whatever sentimental um upside you might have. Um doesn't make sense to Yeah, and I think that's what you're talking about.

for the unicorn audience, but short term as you're building the industry, this is not what uh you're this is not what I see most people should be looking for. You have to build up the industry, but this is still not, you know, it's not a non-profit. It's not a charity thing. Everyone needs to be entrepreneurial and thinking ahead, but it's still everything in stages.

Yeah, and then, you know, I think one really important thing to say is that things only really change when they sustain over time. Exactly. So, whatever initiative that might be that can exist for a few years based on pure love and goodwill, it most likely won't make it then either. Uh, it is it is the what sometimes for

founders, especially if they you know, are very idealistic might seem like a capitalistic compromise. In reality, that's the change that must happen in order to take that incremental step. And it might not be more than that. Like you I think I think people shouldn't um shouldn't be too hopeful how much change they can make. Like, you know, just

being real. Uh, we said it's still really broken and we need to think about what are the root causes. Yeah. Rather than just band-aids popping up all over the place. So, I think this is all This is where the game changers will really happen.

Is when root causes are really dissected. Andrea, it's been a pleasure talking with you and We could do this all day. Yeah, we could. We could. That's also an issue because we shouldn't Wait. I was telling one of our listeners.

I was talking about my favorite podcast right now being Lex Fridman and you know, some of his newest episodes like 5 hours long and I'm like, this guy, he's amazing because I know he can retain it. But again, but that's also the change over time. The music industry needs to become uh, there needs to be more people listening to this kind of stuff. Even though there's actually a lot of people listening to Sound Connection. So, thank you very much. But, um

Andrea, it's been a pleasure and I think um for me it's so refreshing to having a person in Europe that's in investment in the space that understands music so deeply. And I think that the contribution you're going to make in the future with being a voice in the space is going to matter because having

hardcore business people in music investment is so key. But there are so many gaps to be bridged and I believe your voice can be a part of that. So thank you so much for sharing your experience on the podcast and um I loved it. Thanks for the invite. It's always so good to talk to you and uh happy to do it on camera, off camera, anytime. I think um the more we keep getting together and talking about this, the more changes can be made and of

course anyone who's listening to this um and you think you have an idea, you know, go to our website, send in your pitch deck through our funnel. I promise you, we screen everything. But also, do some research. Know what we invested in. Uh don't just pitch because you think you do something in music, but pitch because you think you fit with the thesis and that's what every uh investor wants to see. So uh we're rooting for all of you.