You may have heard of the reality show Shark Tank, where entrepreneurs present their ideas to a panel of investors, or 'sharks.' These 'sharks' decide whether the entrepreneurs' ideas are worth their cash. Cab 20 manager Tom Callahan saw this as an opportunity to explore an alternative way of funding the band. Their initial proposition of $200,000 in cash for 20% of all Cab 20 revenues (other than publishing) was modified by the investors to the tune of $200,000 in exchange for 50% of these same revenues. Tom ultimately turned them down but gained insight into the world of venture capitalism in the process. We interviewed Tom to see what other bands could learn from Cab 20's foray into a new kind of funding for musicians.
Indie Ambassador: Where did the idea of trying to fund the band like a startup with VC money come from?
Tom Callahan: I had seen the show and thought it was fascinating, and they had never had a band on before....I bumped into a friend of mine and the subject came up and he said he was friends with the executive. Producer Clay Newbill. So I just took it from there.
IA: Can you give us the specifics of the deal you were proposing? Why did you decide to leave publishing revenue out of the equation?
Tom Callahan: Well the way the show works is you can always increase the money you are asking for but not come down. So rather than ask for a large sum I was using the publishing as an incentive to get more money. They didn’t come in in price and I wasn’t going to give the pub away unless it was substantially more money
IA: If you would have secured the money, what would you have used it for?
TC: The money would have been used for tour support, maybe a promoter for an indie single to radio, buying a van, internet marketing....maybe shoot a more expensive video?
Money goes quick.
IA: Would the equity holders have had any influence on your creativity?
TC: None haha
IA: Do you think fundraising is how bands will take off in the future? Are the days of slowly generating more revenue through traditional avenues like EP sales and smaller shows over?
TC: I think it is definitely an option. Kickstarter and others seem to generating favorable outcomes
IA: Do you think going after investors is a smart idea for every band? At what point in a band’s existence is it right to try and raise funds in return for equity?
TC: I think when you are ready to take that next step and the resources are just not there. There is
always a way however with or without money. Money can hasten the result.
IA: Did anyone in the band have an ethical issue with it?
TC: At first the leader of the band Bert wasn’t so sure, but it wasn’t and ethical issue it was more of a coolness issue. But they had a great time doing it and they are smart guys and understood the benefits of it. Let me say here though appearing on the show wasn’t all about the money it was as much about performing in front of 7 million viewers and using the publicity angle. There were no guarantees I would be offered the money.
IA: Is there anything as exciting as reality television in Cab 20’s future, or are you taking a break from the extreme?
TC: We will be doing a mudwrestling event where Bert will wrestle anyone for $1. If he wins you owe him $2