Monday, Sonicbids, a Boston company focused on trying to connect musicians and promoters raised its first round of venture capital; a $4.5m round from Edison Venture Fund. Sonicbids is focused on one of the biggest challenges of a new creative effort: audience discovery and connection.
Arguably, the most trying step of any new venture is the initial marketing; the discovery phase where a project begins to seek its audience. Whether it’s a blog, a website, a new product, or a new book, absent deep pockets for marketing expense, the process is usually an exercise in patience and frustration. After months of toil, someone labors to find their viewers, their listeners, the readers – the audience who will give their product or creation life outside the author’s domain.
Finding the audience is a test of dedication as much as it a test of talent. In the music industry, this kind of struggle reaches its pinnacle. For a struggling artist getting heard is a true test of perseverance. Historically, many would go through a process of sending out tapes and letters in bulk to record companies. They’d work their craft in dive bars and little festivals. Write songs and hope they’d be good enough. Hours on the road, paying their dues – chasing promoters to get a chance to play a show. Slowly, eventually, if the talent was there, buzz would build. More work would come. Sometimes favors would be called in, there could be begging and pleading for a chance. Eventually, there might be a record contract or a commercial hit.
Today it’s much easier and more cost effective to produce content (music or otherwise). There’s less need for a larger partner like a record label. Almost anyone, for example, can create a CD or a website with a little effort. To reach an audience is a little easier too. There are huge opportunities like the “reality TV lottery” but even on a small scale, people are more connected and more aware. Thanks to the Internet, viral marketing has wide reach if you find the right “connectors.” Just ask Lonely Girl 15, or any of the other YouTube stars.
Still, even with new tools, it is difficult. Widespread discovery for musicians remains a challenge and many of the old proving grounds remain a part of the process. Especially touring: from the neighborhood bars to big concert festivals. Loyal fans help build careers. But touring itself is not automatic. It requires a connection between promoters and musicians.
That’s where Sonicbids comes in. Sonicbids was formed in 2001 in Boston by a one-time aspiring musician to provide an Internet service for making that introduction. For a fee ($5.95 a month, or $49.95 a year) they help artists generate an Electronic Press Kit (EPK) and submit it to thousands of festivals, competitions, clubs and promoters.
In a press release announcing the financing, the company reports having more than 120,000 artists represented and more than 10,000 promoters (contests, clubs, festivals etc) include notable entries like the John Lennon Songwriter Contest and Austin’s famed South by Southwest festival. In 2006, Sonicbids facilitated 30,000 deals between bands and promoters.
Terms of the financing were not disclosed but assuming Sonicbid is drawing full-year subscription fees from a majority of its represented artists (70k are reported on the website, 120k in the press release), than their year ahead gross revenue should be conservatively in the range of $3.5 to $5million. Using the middle of that range and a minimum of a 2.5x multiplier over gross sales, the pre-money valuation was probably near $10.5m to $12.5m. That suggests Edison’s investment bought no more than a stake around 35 to 42% of the company. The venture investment was also classified as a Late Stage Investment in Edison’s official press release. That classification typically better fits a deal that is only a minority stake.
Edison typically acts as sole, or lead, investor in deals up to $10m. They specialize in companies looking for expansion capital and have $550m under management.
The investment capital at Sonicbids is earmarked for general business expansion and development as well as further international expansion. The company’s artist database currently spans 100 countries.