Finance and funding for music businesses

The music industry can be a difficult sector for securing private investment. However, with proper research, preparation and the right sales pitch, you may be able to finance your music career with the help of an investor or a business angel.

Different types of private investment

To fully grasp the opportunities that may be available, you must first understand the difference between:

• equity finance - this covers different investment types usually made by private individuals or private equity firms
• venture capital - this is a form or private equity, but managed differently and reserved mainly for businesses with potential for high growth
• business angels - these are individuals who seek high returns on generally smaller amounts of private investment

When searching for the right music investor, you must take into account different factors including:

• the amount of money you need
• the type of project you wish to fund
• your return potential
• development opportunities

Remember that investors give their own capital to your business. In return for their money, they will normally expect you to agree to certain conditions. These may be:

• repayment within an agreed timeframe, if you've made a loan deal
• giving part- or joint ownership of your business
• registering as a limited company

Take into account what you may be sacrificing by getting an investor on board. Will you have to give up some of your business or your autonomy? Does the investor want to have a say in your business decisions? Do they have experience in the music industry?

For an in-depth overview of each of the three types of private investment, see shares and equity finance.

Where to find investors for your music

The most obvious routes to finding an investor for your music are:

• your local music scene - ask other artists and promoters
• your local business community, including local Chambers of Commerce, business development organisations, business networks and local councils
• trade bodies and associations
• local and national investing and venture capital groups

To find and secure investment, you will need a comprehensive business plan, a detailed marketing plan and realistic financial projections. See how to prepare to secure equity investment.