At one time or another all bands need to raise capital. The money may be needed to record new songs, tour or to do marketing and promotion. If the band is organized and has a clear honest picture for the investors of how they will be repaid, they are much more likely to attain the investment they need.
You need to be realistic:
99% of band investment is NEVER recouped.
Knowing this can be powerful. Do your fund raising in early to mid December. Approach your friends, any contacts you have who are anticipating their tax returns and make enough money to actually need write offs.
Let your investors know that your band needs investment. Tell them in return they will get t-shirts and music, but most likely the investment will be a WRITE OFF for them. If your investor needs some more tax deductions, that can be a valuable asset you have to offer at the end of the year. They have to give you their money before January 31st. You will give them a receipt for their taxes.
The investor needs to understand that they are participating in a HIGH RISK INVESTMENT. They also need to have a clear picture that they may never see a return on their investment. If you don't make that clear, preferably in writing, it can cost you a friend.
Whatever you do, do not make the invest a traditional interest bearing loan that you personally are responsible for and will have to pay back no matter what. Make it clear that it will be ONLY be paid back out of the band's net earnings after expenses.
ABOUT YOUR PROMISSORY NOTE
Place the band logo at the top of your investment receipt for a professional look. Print the notes on nice paper. FedEx Office has elegant stationery that lends a nice look to an investment promissory note. FedEx Offices also has stock Promissory note forms. Again, be sure to specify on the note that this is a HIGH RISK INVESTMENT secured by the band's net earnings.
A licensed Attorney can draw up a formal promissory note. It gives the investor a comfort level that you are professional and they may get a return on their money if the band does well. You will pay the attorney their hourly rate for this. It can be expensive. You can also find promissory notes on the web.
You will need to provide a signature place for each member of the band, the Investor, and a Witness.
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