How To Attract An Investor And Gain Financing!

Yes, this blog is finally here. The one that so many have been asking for since I started these. Why has it taken so long???: Well, there are people out there who have gone to college, achieved their MBA's in marketing and STILL struggle on this subject. Yes, for a time, I personally believed that achieving this is a talent that some of us are born with and some aren't. It's just like a poker player's ability to read an opponent or the way a magician plans for you to pick up just the right card so that way you fall further into HIS illusion, just to make you give in.

But, I'm willing to put in that effort with the rest to you to treat it as a skill and give you at least a layout of How To Attract An Investor. So fellas, put your business ties on. Ladies, put on the professional skirt. Yeah, that one you use for job interviews. Use extra starch, too. So, LET'S GET IT:

So, how many of you out there play the stock market? If you do, you'll pick up on what I'm getting at immediately. If not, no worries, we'll take this slow. You need to understand this in order to approach this from an investor's P.O.V:

Let's say you have $3K or so as a gift ready to be invested, because your uncle tells you "If you learn how to play those stocks, you'll never go hungry!" So, what is the first thing that comes to mind? "This better be F$&#% profitable!!!"Nobody plays to take a loss. So, the appropriate way to go about this is very simple: RESEARCH! You take the time to look into what businesses are currently successful. Most likely, they don't need you so their shares are very expensive. But, that doesn't make them any less important, you see. The effect that THEY have on the consumer marketplace will effect every other investment you have within their competitive genre.

Let's take the iPhone for example. THE smart phone of the consumer marketplace. When it first hit, everyone thought the world would crack open, besides that one major gripe that harmed it's major sales: The AT&T exclusivity, due to their company being the first to harness a proper 3G network. So, immediately the stocks sky rocketed for the product, but other smart investors approached the situation by seeing the whole battlefield responsively. The Blackberry also existed, who had the power and potential to run circles around the iPhone, but it's major problem was the development of the app store. They couldn't afford the money to pay the developers, so they allowed venture capital investors(that's all of us) to invest in the marketplace. That business battle continues.

An even better example is one I've experienced myself. You see, when I first started E*Trade a year ago, I just recently became tech savvy(the appropriate word is "Technophile", but I just don't want to go there...). So, when looking at investments, I looked at statistics for the video evolution war (around when Blu-Ray won) which lead to the new DVD war. At this point, it was between Blockbuster, Netflix, Redbox & Amazon.com. I researched the history and future goals of each, but I noticed one thing in particular: Netflix had signed exclusively with Microsoft.
At this time, I had already pieced together that this meant Instant Streaming through Xbox Live, putting videos directly into people's TVs without the mail. After that, I looked at the number of people who own an Xbox 360 over PS3 and it wasn't even a competition. This showed the death of the other companies and they presented the technology to me in an amazing proposal that showed the demographics, expected raise in rate of sales, consistency & the increasing profit in my investment. I was sold and to this day, that is the best investment I've ever made and I'm still sticking with it.

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Now, the reason why I say all of this is because now you understand how an investor thinks. Just like the rest of us, they just don't want their money back; They want MORE. And who can blame them? Why would they invest in something not profitable?

So, you have to show them how you ARE profitable for yourself and them. And the way you do that is to build an amazing BUSINESS PROPOSAL.

Now, remember everything I just taught you on how to find stocks? Just apply it here from the opposite angle:
1. A Proper Distribution Strategy: Now, if you were planning on taking the money and using it to tour or to market yourself before you properly got a distribution plan set up, stop reading this and just punch yourself in the face. This is a business, after all. So, go about the process I have mentioned before in other blogs on how to find a distributor who gives you your own publishing. Plus, you need to show in your investment package the exposure to your distribution, the price of your music and your expected income from it. Now, depending on how you're either paying your investor back in interest or by venture capital is why this is so important.
Because, A) If it's interest then you have an investor who gives you full freedom. But, they most likely gave you a specific time/date to pay them back with interest. So, that means make double the money that they gave you and then some to not only make a profit, but to pay off debt. It's not a bad deal at all, with the right distributor. Just make sure you have a proper business plan and the right distributor. I've done this one myself.
Or B), If it's venture capital, then that means that they approached the distributor with you and signed for co-publishing. Now, if your investor demands that this be your main route of investment, then go all out with the distributor! Make your investor buy a package with you, because they'll also be needing your marketing as much as you! So, a package would include Film/Television/Gaming/Radio Solicitations, BDS/Sound Scan reports, Booking Agent fees, etc.

2. Realistic Sales Projections:
Now, never think you're going to tell someone you have "20,000" albums sold and for them to not have Soundscan reports. They can look up your album and tell the rate of sale easily and even know if you're profitable or not. So, take the time to realistically look at the statistical sales of your genre combined with the strength of your marketing. That includes demographics of your listeners(ages, location and culture). Look at the competition you have and how you would reflect upon it. THEN, you will know what a realistic sales number looks like in your future.

3. A Solid Plan For Recouping Investments:
Hopefully, after all I've said, you already have this figured out pretty well. lol. If not, go back to the fourth paragraph and start again.

4. Present A Well Laid-Out Business Plan:
It's far more simple than you think. Show them your business team strategists(managers, agents, publicists, etc.). Hell, even tell your team, because they will be there to help you! These are the people who are going to pay them, technically! lol. Show them(investors) how each of your investments with your business team will profit the investor or their business. If your investing sponsorship is designed more like a sponsorship, show them how often their label will be displayed, where, when and to what demographic. Show them the length of your business plan, the overall goal and where this will place you and your investor within the near future. And obviously, show them exactly why and how you would be a professional success.

Contact me if you're interested in seeing an appropriate Business Proposal template actually given to an investor from myself.

This blog is meant to be the first of two-parts. I will be finishing this very long chapter soon. Contact me if you have any questions or need info.