Music funding platform beatBread launches exclusive investor network

Peter Sinclair, BeatBread

Music funding platform beatBread has launched what it calls “an exclusive investor network” that adds funding from music companies and professionals, distributors and ‘high-net worth’ individuals to its existing pool of institutional capital.

The company says that the new feature will allow artists who have received a qualifying offer from beatBread to highlight tour dates, collaborators, marketing partners, and other initiatives to a range of pre-approved investors.

Investors within the network can use this information to bid on providing advances on some or all of the royalties associated with an artist contract.

According to beatBread, this will give artists the potential to receive better economic terms than offered through beatBread’s automated process alone.

Artists who qualify for the invite-only investor network can set their minimum terms, and if no combination of funding offers from within the network meet the artist’s threshold, beatBread says they’ll be able to accept their original offer from beatBread or walk away entirely.

beatBread notes in a press release announcing the news that its investor network does not accept investment from fans. The company says that this avoids “the significant illiquidity and brand risks created by fan-based crowdfunding”.

Investors admitted into the network will “all have an interest and demonstrated financial capacity to fund multiple artists at scale”, says beatBread.

Since launching in November 2020, beatBread says it has paid advances to almost 500 artists and labels across multiple genres, six continents, and a broad range of career stages, via its chordCashAI technology.

Advances offered through beatBread range from $1,000 to as much as $2 million per artist for a limited share of existing catalog revenues, with options also available for unreleased music. The company says that advances from within the network “can go even higher”.

beatBread says that advances are repaid from a share of an artist’s streaming and airplay revenues, over a period of the artist’s choosing.

In June, the company reported to have closed its biggest deal yet with an artist, announcing what it said was a “seven-figure artist financing deal” with singer-songwriter Elley Duhe, and Not Fit For Society, her management company and independent label.

In March, beatBread launched an Artists Advocacy Council featuring the likes of Mike Caren (Artist Partner Group) and Dave Dederer (Label owner and founding member of The Presidents of the United States of America) as founding members.

MBW caught up with beatBread CEO Peter Sinclair to find out more about the new investor network.

Why did you decide to launch the investor network at this time?

It is the next step in beatBread’s mission, which is all about – and will always be about – providing more choice and power to artists and the independent partners who support them like distributors, artist service companies, producers and so on.

The first step in this evolution was to pull together institutional capital and top-flight AI so that we could fund artists on friendly flexible terms at scale (both large numbers of artists and large checks to artists), and then marry that with an artist-facing user interface that is intuitive and allows artists to choose their own terms. We’ve been able to assemble a critical mass of artists in this first step of our evolution.

This second step is about bringing in other funding sources into the mix, leveraging our foundational elements of intuitive UI and smart AI, so that artists have more leverage against more sources of capital.

Investors need to be approved in order to bid on providing advances. What is the criteria for approval for individual investors?

Investors can be music companies, music executives or high-net-worth individuals. We don’t accept retail investors or fans.

“We believe crowdfunding and fan funding is corrosive for the artist-fan relationship for the vast majority of artists.”

We believe crowdfunding and fan funding is corrosive for the artist-fan relationship for the vast majority of artists, and that many artists worthy of funding can’t find that funding within their fan community.

What has the response been like from the investment community so far?

We’ve seen a really strong interest and very significant activity on our first 20 deals that have been put to the network.

Music is an attractive asset class for investors because it’s uncorrelated with financial markets which are pretty turbulent right now. Our platform gives investors access to a different class of artist than those that dominate the financial headlines.

“Our platform gives investors access to a different class of artist than those that dominate the financial headlines.”

We offer an opportunity to invest in artists in the early and mid stages of their career, and can fund artists who are not iconic. It’s a much bigger universe of opportunity than the legacy artist buyouts that dominate the headlines these days.

Advances offered leveraging beatBread’s algorithmic approach can be as much as $2 million per artist. Can investors offer more than $2m, and if so, is there a limit on the maximum allowed?

Investors can offer as little as $1,000 or as much as several million. The key thing is that we offer sections of deals – as little as 1%, as much as 100%, according to what each investor wants to offer – so artists can assemble a consortium of funders from inside and outside the industry.

This not only allows artists to get the best terms possible, it also enables smaller music companies to fund just a part of the deal, provide great service, and more effectively compete with major labels or companies that might not provide the best service to an artist, but have a bigger check book. Our platform and network empower artists, but it empowers independent distributors, independent labels and artist service companies as well.

BeatBread raised $34m in February. Are there plans to raise more funds in the near future?

We’re a rapidly growing company, and we’re making sure that we are funded appropriately to realize our ambition for the business. Right now we are focused on continuing to build our access to institutional capital, and we’re incredibly pleased by what is happening in that space right now. More news on that soon.

What are your long-term predictions for the music funding space?

Finance and services will become increasingly decoupled, giving more options and more leverage to artists on both fronts.

Ownership will increasingly be retained by more artists, in greater shares than ever before.

Deals will become shorter and shorter, and more “project-based”, giving artists more flexibility and “free agent” potential.

Strong collectives of artists, producers and skilled managers will become the new center of gravity of the music industry, with labels becoming more focused on service and support rather than gatekeepers, power brokers and financiers.

High-profile start-ups in that area will pivot away from finance and become platforms that provide superfan content rather than crowdfunding.Music Business Worldwide

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