Just finished the VC presentation to Mike Gausling. They are not going to invest due to risk - specifically around Major label licensing. Same stuff we’ve been hearing. The meeting went like this: They were running 1/2 hour late. Entered the “large” conf room in the BF incubator, handshakes all around. Passed out copies of executive summary. Plugged in my thumbdrive with the presentation. Opened and started. Intro with how we always get hit with questions about competition. Went into company history, market overview, target market specifics. Began service description. Mike wanted to know if the licensing was exclusive (ie: exclusive supplier agreements). Nope, it’s all relationships. He wanted to know how much the licenses cost, $200k + per license. Went back and forth about how that works. Reviewed functionality - no problem so far. Went on to financials - reviewed numbers - no problem there either. Came to end and this is how it went. He’s a new VC and not sure this would be his first investment. He sees the licensing with the major labels as a predecessor to a full launch and doesn’t see how it can be successful without the 4 majors (eMusic didn’t mean much to him). He sees it as a package - you have to go out with everything. And for him - as an investor, he is not sure he wants to put money into licenses. His feeling is that although it’s a chicken and egg situation, as an investor, having those licenses in place mitigates his risk a bit. So - go get the licenses - and then we can revisit. And that’s just a benchmark before we get into any real due diligence. And of course, he’s concerned about competitve response. Particuarly not sure if social networking is a legitimate way to do business. Not sure the audience is interested (even though our research shows otherwise). But then again he says he’s not someone who knows about this stuff. All in all, pretty much the same thing we’ve heard any number of times. Get the labels, then we can talk. Get a stronger barrier to entry then we can talk. Get someone who gets this space and go talk to them. There just are not many of those people. So I pick up and keep going.

Originally published on WordPress on January 25, 2007. Migrated to this blog on May 29, 2025.