Taking note 3-4/2015: How to fund a festival startup

Matti Nives by Korian suora

BY Matti Nives

“Perhaps this is the gold rush of our generation,” a friend of mine said. He was referring to the startup culture which has gained momentum and media coverage in Finland thanks to success stories such as Supercell and events such as Slush.

Who wouldn’t be into the startup scene? That is, it seems like the perfect line of work for the creative multi-professional. First, come up with a disruptive solution for a common yet often overlooked everyday problem, round up a bunch of your equally talented friends, work very hard and then roll the dice. If all goes well, the money people will come out of the woodwork to ram cash down your throat. There’s no exit like the BIG exit.

Well, kind of, anyway. But the point is this: startups done right work because new ideas in certain fields of life are actually worth a lot of money. There is a real benefit in funding a new innovation early on.

Cut to the music scene. Great events seem to be popping up everywhere, from the big success stories who can bring it all home due to a successful ratio of high risk/high reward to the beautiful small get-togethers who mostly operate on a volunteer basis. However, there seems to be a gap which leaves a bunch of innovative new events out in the cold. How to fund the festival startup: in other words, an event which has high professional aims but which happens in a context that does not bring in the big bucks.

What I mean is the kind of event that would require a lot of production and professional care in order to realise its full potential, but caters for music that is at its best at relatively small venues. The main question being how to fund a new event which is based on something other than the high reward of big ticket sales.

Seeking commercial money is one option but in my opinion the smaller the event, the quicker its atmosphere and identity are compromised by a high-profile commercial partner. I have seen way too many events with their visual identity crippled by excessive sponsor logos, banners and all the extra noise.

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In 2013, I discovered what a festival startup actually means. It means launching a new event at its full scale without too much artistic compromise. In other words, you don’t invest a lot of time on the growth of the event but rather release something on the scale at which it is intended to work later on as well. At the same time, you try to build the structure to support the event on the production side (back-end growth) rather than making it your goal to move to bigger venues and book bigger names (front-end growth).

Our festival project is called We Jazz and I think it characterises the term “festival startup” quite aptly. We simply made the best bookings in terms of artists and locations, applied for all the different funding we could think of, took a significant personal risk with the ticket sale projections (even in smaller venues they count of course) and, most of all, tried to keep all the extra costs low (in startup world this is called “bootstrapping”).

Usually what happens is that the staff only get paid if the financial results are remarkable. Ours was OK because we broke even somehow in year one but, in the end, the staff got only paid a fraction of their salaries, whereas the founder drew a blank financially. Year two was tougher after most of the staff were getting paid regardless of the financial results, and the next one, year three, finds us back on the “bootstrapping” model, based largely on “sweat equity”, as there is no option of doing things out of the founder’s pocket for the second year in a row.

Sure, there is some public funding to be had but the problem is that it’s all very scattered and uncertain. Many a new event simply has to take the risk of budgeting some funding which will later be missed or alternatively leaving some crucial artistic content out because of the lack of secure funding at the time of deciding how much to spend.

Another problem is the emphasis on the longevity of an event in the funding granted. Money tends to follow money and often it seems that those who have a secure funding base get the most of the shifting insecure funds as well, perhaps due to better professional structure and a more solid promise of delivering what they claim to. The protocol of funding only events with three or more operational years by one major source of festival grants is a testament to this. Innovation and introducing something new into the scene does not always seem to be a great selling point.

Simply put, we need better structures to support the new big ideas emerging in the scene.

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In the real startup world you could try and turn to some angel investors with a great concept, but it seems they are non-existent in financially non-profitable fields such as music events with high risk and low to moderate reward, at least on the smaller scale of “boutique” events. Why would anybody invest in something that doesn’t generate the financial return on investment?

One idea that I have been toying around with is a new entity which would serve as a matchmaker between the culture startup and the angel investors who would seek something other than money in return for their investment. (I’ve heard that these patrons of the arts actually do exist but I don’t know where to find them.)

Essentially this entity could work in a way not unlike that of the existing foundations funding music, but in closer contact to the applying organisation and in a more flexible way. The key feature here would be pitching to one major source of funding who will guide you along, rather than several different ones. The funding as of now is fragmented into bits and pieces, making every edition for the new event still trying to find its ground a very insecure undertaking.

One key difference I’m missing currently is the kind of grooming and mentoring that seems to be quite a basic thing in the startup world. Another is finding the right sources of funds to channel so that it would be enough for a festival startup.

The question is, how would one brand being a patron of the arts so that it would attract the right people? And do these people even exist in Finland? Moreover, who should be included in the matchmaking body which would pitch the new event to the potential investors?

I think these are all questions that need to be raised in the future as it seems that the public money available is getting smaller by the year. We need more new content-makers to keep each art form in motion and we need some new ideas on how better to take them through the first couple of years.

Matti Nives is the founder and director of We Jazz and its sub-brand Hei Hei Media. He also currently works as a co-founder and creative planner in two startup projects not related to music.

See alsoHanna Isolammi’s article W(h)ither arts support?