Having trouble finding financing for your business idea?
Take a lesson from Art Brambila, a longtime Los Angeles music industry promoter who wants to establish a start-up record company focusing on the bilingual music of America's millions of Latino citizens.
Brambila needs $7.5 million, and his strategy is to approach potential backers by offering his company, Brown Bag Records, as the solution to a problem--namely the allure of the mass market to the record industry.
Why is the mass market a problem? It can make you rich, to be sure, but its allure forces big record houses to spend their promotional money mostly on big-name mainstream acts that generate big sales. The result, Brambila says, is that the industry misses growing opportunities represented by such ethnic groups as Brambila's.
Similarly, Hollywood eagerly finances the movies of a handful of acting and directing stars, spending tens of millions of dollars in the hope that big names will draw big audiences, Brambila says. And book publishers lavish huge sums to promote the works of such A-list writers as Stephen King and John Grisham, leaving others to languish.
Throughout the entertainment industry, Brambila says, the pressure to generate the biggest and fastest return forces promoters to back only the works of people with the widest possible market appeal. Indeed, he says, promoters have no choice but to ignore audience segments even when they sense they might prove profitable. Worse, the mainstream record producers don't know how to reach those segments, Brambila says.
But he thinks he has a solution to the problem, and if his strategy works for him in raising capital for Brown Bag Records, it may yield a lesson or two for other entrepreneurs struggling to raise capital for their own ventures.
To address the problem, Brambila contracted with the Mexican American Grocers Assn., which counts 8,000 members nationwide, to distribute his records through stores selling directly to the Latino market. The MAGA membership includes hundreds of outlets operated by such grocery giants as Albertson's, Lucky Stores and Ralphs, serving predominantly Latino neighborhoods in Southern California.
"The partnership gives us immediate distribution that we couldn't get from the major record houses," Brambila says. "They always said they would sign bilingual acts, but they didn't know how to reach the market that would buy their records.
"We found a way to do this. I signed Latino acts with the major labels when I went into the record business 25 years ago, but it was always one act with one label and another act with another label. Why? Because none of the labels knew how to market the acts, and they wouldn't do anything more than hope that the one act they produced would hit it big."
That happens, Brambila says, but in chasing the mass market, the record business, like every other segment of the entertainment industry, misses many opportunities to bring their wares to niche markets--and to bring acts from niche markets to the masses.
"Our partnership with MAGA will allow us to take a product that the major companies may not understand and get it in a market they certainly don't understand," he says. "Our plan is to create an awareness of our label in that target market by making it convenient for people in that market to buy our product.
"If we succeed, we will be able to break acts back into the mainstream. It's a niche marketing system designed to bring the music of millions of bilingual Latino Americans to the mainstream."
Will this strategy also gain Brambila the backing he needs--namely $7.5 million to get Brown Bag Records up and running?
Two years ago, when he first broached his idea to a number of major labels, nobody wrote any checks, Brambila says, because like the major houses themselves, he had no way to get his product to market.
But his agreement with MAGA appears to have turned around things, Brambila adds. Last month, he won a commitment from one music industry backer for $500,000, and although that's only a fraction of what he needs, it's a good start.
The lesson for others who seek outside financing, Brambila says, is clear: If you want the backing of strategic partners, your business idea must present them with the solution to a problem.
"You can't wait for your strategic partner to help you," Brambila says, "because nobody's going to throw money at you until you prove that you can solve some problem they face.
"In our case, we found a niche market and created our own distribution system. I think that will make investors want to back us. We have something viable, and we were creative in addressing the problem."
Juan Hovey can be reached at (805) 492-7909 or at email@example.com.