the parallels of indie record labels & angel investing

Finding a record I released in Japan. Circa 2008.

As a wee lad of 18, I co-founded my second record label, The Militia Group, & a music publishing co where for 10 odd years I produced and released albums from artists such as Copeland, Juliette Lewis, The Rocket Summer, The Appleseed Cast, and Cartel. One thing I have gleaned from my experience in both the music industry, investing, and building startups is that a record label is rather analogous to investing. Even more so, indie record labels are to artists what angel investors are to startups.

Indie labels invest in artists just as angel investors do in startups. As the defacto head of A&R, I would listen to hundreds of demo’s and hear ‘pitches’ from managers and artist’s on why they would succeed while 99.9% of artists fail. Angel investors hear similar styled pitches and review decks (another form of a demo tape) from startup founders about why their business idea is great and why they have what it takes.

How Angel Investing and Indie Record Labels are alike:

1. Angels take more risk in their bets on early stage companies, sometimes without even a minimum viable product. Indie labels take similar bets on artists, often before they’ve developed an fanbase and with just an awkwardly engineered recording done at their cousin’s friend’s basement studio.
2. Angels aim to make a return on their investment when the startups receive higher valuations, are acquired, or go public. The best indie labels thrive when they help develop artists who turn into household names, become more valuable to promoters as they grow their fanbase, or in some cases are acquired by a major label.
3. Indies and angels can sometimes earn a faster ROI when a major label buys out an artist recording agreement as a VC invests at a higher valuation.Major labels are able to invest larger sums in an artist, especially if they have built a decent fanbase (the equivalent product that’s gone-to-market, has a respectable number of active users), as a Series A investor will usually only invest if they see some proven traction after a angel or seed investor. Angels usually make smaller investments just like indie labels, they’re not fronting $1m advances.
4. Indies win when they move quickly and have their finger on the pulse of the music trends prior to others. Angels win in the same sense when they bet on the right trends before they peak.
5. Indies and angels win when they have a network that can tap into and a track record of success. If you haven’t led to success before, you’re less desirable to partner with to lead to success in the future.
6. Indies and angels have similar success rates. Most lose, while a few bets payoff big time.

One aspect where they might be a little less alike, and that is the nature of art versus technology. Technologists tend to utilize to data to inform decisions or what sectors to invest in. Creatives may use some data, but tend to lean on their intuition and gut when making a decision on an artist. Music and art isn’t entirely quantifiable. It’s impossible to guarantee what particular sound, riff, track, chorus, vibe, etc. will connect with a mass audience in the next couple years. That’s also the beauty of it.

I love music. I love it most when it’s treated as art and blows my mind at one’s capability to write, perform, and create something beautiful out of nothing. At the same time I enjoy technology when it solves pains in our lives and improves one’s overall quality of life. These two worlds still don’t seem to understand in each other, and perhaps never will, but it’s obviously feasible for us to appreciate both.