The Music Foundry, a music technology pre-accelerator, is looking to fill a trial class this fall to address a startup need within the music space. But its bigger task may be fighting an abiding skepticism about music tech investments.
Music tech has long been considered a risky investment for VCs. Stories of companies like Turntable.fm, which went from a $37 million valuation in 2011 to flaming out and closing its site two years later, made potential investors tune out music tech pitches.
“A lot of accelerators have an aversion to music,” said John Wolanin, chief product officer of social music service LuckyPennie, which recently relocated to Cincinnati to join The Brandery accelerator. “People have gotten burned in the music space, so music is more of a difficult sell to people considering the track history.”
But The Music Foundry’s co-founders Corey Crossfield and Marc Saltzman said those misconceptions were unfounded, pointing to successful acquisitions like Rhapsody and Songza that they said many investors ignored.
Rhapsody announced earlier this month it acquired music discovery startup Ex.fm and Instagram-like music app Soundtracking for undisclosed amounts. Google acquired New York music streaming company Songza in June for a price that reportedly ranged from $15 million to $39 million. And Apple’s recent $3 billion purchase of Beats Electronics and Beats Music could hike up the billion-dollar valuations of giants Pandora and Spotify, as the industry reassigns new value on music streaming sites.
The Music Foundry plans to open its application to startups across the country that both directly and indirectly affect how music lovers access content.
“Our goal is to showcase other companies beyond music distribution and consumption,” Saltzman said.
Headphone manufacturers, audio recording software producers and live event ticketing distributors are just a few examples of startups that Crossfield said would fit the pre-accelerator’s vision.
Participants will be charged $150 to cover renting costs for the eight-week program, which is planned to take place at the Mid-Wilshire co-workspace, Blank Spaces. The three-hour weekly classes will cover anything from digital rights to marketability, consumer research and music industry metrics.
“There are a lot of music startups that go to an accelerator program, and they don’t get beyond the seed round,” Crossfield said. “The idea is to really help develop these products regardless of their vertical in the industry.”
The pre-accelerator does not offer financing for participating startups, but Crossfield and Saltzman said they hoped to launch a fully financed accelerator by early next year.