Our investors had no experience or working knowledge of the creative industries and I think they initially saw it as a slightly glamorous investment. That for the same money they’d otherwise be giving the taxman, they could go to gigs, meet artists and have a bit of fun.
But in music there isn’t always a clear trajectory for ROI or exit strategies. After about 18 months they realised that music is a tough, hit and miss industry that requires a lot of patience, quick responses and not much showbiz. MySpace was on a meteoric rise and there were other networking platforms coming into the market. Our investors got cold feet and pulled out almost overnight, leaving us with artists signed and records made but no money to market them.
It was a sobering experience that left us very wary about going down the private or bank investment route again.
I decided to leave and found Red Grape as a stand-alone independent label. I brought over the artists we’d already signed and basically had to go cap in hand to friends and family. It didn’t feel great to be honest. Our families believed in and supported us, but having to ask for them to kick start our business was not an easy thing to do. However, it was our only option so we cut costs, streamlined everything we could, put our money where our mouths were and pressed on.
From there it took about two years to stabilise Red Grape. We learned to maximise our budget by doing things ourselves, only bringing in contractors when really necessary, and focussed on getting the most from every penny we spent. More recently, I’ve worked with private investment companies on specific artist projects and the experience has been much more positive. I guess the silver lining to the whole episode is that we’ve now learnt how every aspect of our company and this industry really ticks, and equally importantly what investors are looking for. That’s something I’d advise any start up to focus on from day one.
At the end of the day we start companies to make something, not go looking for money, but do still check under every rock and contact every fund possible – there is finance out there but you need to plan carefully and be completely focussed about what you’re aiming to do.