Securing funding and investment is a great way to get independent record labels and music projects off the ground, and cover the many costs that come with producing music, touring and running a successful label as a business. We are often asked about ways to get funding for musicians and labels, so here’s a guide to the basics and some of the best potential sources.
Getting outside funding for your music isn’t easy, so it’s important to take time to research your options, decide what’s best for you, and don’t rush into any major decisions too quickly.
Before we get into the types of funding available to independent label owners and artists, here are some key things to consider.
The basics of securing music funding
Finding a trustworthy funding source
First and foremost, you’ll need to find where your funding will come from. Make sure your source is reliable.
A bad investment or loan source can cause all sorts of problems down the line, so watch out for extortionate interest rates or investors looking to take more control of your company than you would be comfortable with. Do your research; don’t just take the money and hope for the best.
Know how to approach
Different sources of funding and investment will require different approaches, but the best place to start is by writing a record label business plan. You’ll need to know the aims, finances and forecasts for your business inside out, and writing a clear plan is a great way to get it all down on paper, whether you’re seeking investment right now or not.
Also, when you apply for funding, make sure to check every single detail of your application. Follow any application guidelines to the letter, check for spelling and grammar and get someone else to proofread it. You don’t want to blow your chances over an avoidable mistake.
Decide how much you need
It’s always wise to work out a watertight budget before you start looking for investment. That way you can decide how much you need, rather than how much you want.
Generally, there’s no such thing as a no-strings-attached investment, so taking too much money could be unwise, especially if it comes to paying it back. In contrast, taking too little cash could be a bad move, leaving you out-of-pocket before you get the chance to make a return. Think very carefully about how much funding you’ll need.
Spend it wisely
This should really go without saying, but plan exactly what you’re going to spend every penny of your funding on beforehand. Don’t splash it all on Dom Perignon and Gucci threads! Make a sensible and realistic plan for your cash flow.
Types of funding for musicians & labels
Start-up loans are one of the most common ways in which new businesses get the funding they need to grow and develop. You can approach major banks for a business loan, but you’ll need to make sure your business plan, credit score and research is all up to scratch to stand a realistic chance of securing a loan. Also, label owners based in the UK can get help accessing start-up loans with the Professional Record Label in a Box package.
Don’t rely on high-interest lenders. It may seem like an easy way to get some quick cash, but you could end up owing much more than you can afford.
Arts grants are a great option for creative professionals looking for a bulk cash sum to get their project off the ground, especially as you usually won’t have to pay anything back. These grants aren’t available to just anyone and they can be incredibly competitive, so you’ll need to prove you deserve the money and demonstrate how you’ll use it.
There are a few ways to apply for arts grants. If you’re based in the UK, you can apply for grants from Arts Council England, PRS and other sources.
For artist and labels in the USA, opportunities for grants are available from New Music USA, National Endowment for the Arts and more.
Musicians and labels in Australia can apply for grants via organisations including Australia Council for the Arts and APRA AMCOS.
USEFUL LINKS FOR ARTS GRANTS
Help Musicians UK
Arts Council England
New Music USA
National Endowment for the Arts
Music and arts grants are not just limited to these examples. There are other funding opportunities out there for artists and label across the world, and with a little internet research, you may find more schemes to apply for.
Private investors & sponsors
If your music is making an impact across the local, national or even international music scene, you might just attract the interest of private investors or sponsors. This type of investment can offer a much-needed cash injection, new promotional opportunities and more.
Sponsors and endorsement can come from a variety of sources, from music brands, to soft drink, sports and alcohol companies. Rather than just sitting back and waiting for sponsorship, you could approach the brands that you think are a good fit for your artists or label.
It’s important to remember that large music companies and brands receive hundreds of sponsorships pitches a week from labels, bands and musicians, so you’ll need to stand out from the crowd. Focus your pitch on what you can do for the sponsor, rather than what they can do for you.
If your artists have a large and loyal following, but you’re low on cash, a music crowdfunding campaign offers a great way to get the capital you need. Maybe one of your artists want to produce a new album, but doesn’t have the funds required for studio time? Or perhaps you want to take a band on tour, but don’t have the gas money to get you there?
If you’ve got an army of die-hard fans, why not go directly to them for the money you need to produce new music or put on live shows? Crowdfunding websites like Kickstarter, Indiegogo and Patreon provide an simple way to receive payments directly from your fans.
You could also consider using Pledge Music, a crowdfunding platform set up specifically to help musicians and bands fund their projects.
Raise the cash yourself
If you want to stay in complete control of your own cash flow, raising the money you need to grow your label yourself is the best option. They are plenty of potential revenue streams for independent labels and artists to tap into, including sales, streaming and performance royalties, tickets sales and merchandising.
There are plenty of funding opportunities out there for musicians and record labels, but getting hold of the investment you need requires careful planning. Take your time, do your research and don’t rush into any big decisions lightly.
Do you have any questions about securing funding for your music project? Let us know in the comments and we’ll do our best to help!