New York-based investment firm Magna has taken a “major position” in fan-funding service PledgeMusic.
The size of its investment remains undisclosed, although it was made through the company’s Magna Entertainment division, which is overseen by former Maverick Records and London Records exec Russell Rieger.
Rieger was actually appointed as a PledgeMusic director in February 2015. He and Magna CEO Joshua Sason are now two of the three current PledgeMusic directors alongside the company’s co-founder Benji Rogers.
According to Companies House filings, several PledgeMusic directors stepped down from the company’s board in September 2015, including co-founder Jayce Varden; chairman Angus Donaldson; managing director Malcolm Dunbar; and CEO and CFO Dave Hackett.
Magna may be stepping in at a crucial time for PledgeMusic’s long-term prospects for survival. The company filed its 2014 financials as abbreviated small-company accounts with Companies House in November 2015.
The accounts revealed that PledgeMusic ended 2014 with £106.4k of shareholders’ funds: it had fixed assets of £101.7k, cash at bank of £1.66m and debtors of £1.98m, but creditors for amounts due within one year of £3.64m.
“The Company has, since the balance sheet date, signed an agreement that allows it to draw upon an additional £1 million of lending for working capital purposes,” explained PledgeMusic’s notes for its accounts.
“The Directors believe that this additional financing, in conjunction with several cost cutting measures that are being implemented within the company, will be sufficient for the company to continue as a going concern for a period of at least 12 months and 1 day from the approval of these financial statements.”
In February 2015, PledgeMusic filed full (unabbreviated) accounts for 2013, when its revenues were £853.1k, but administrative expenses of £3.15m pushed it to a net loss of £2.36m – considerably more than the £535.6k loss it recorded in 2012.
In the 2013 accounts, PledgeMusic’s directors noted a “shortfall in the cash required to operate as projected in the next 12 months” but said “this funding gap is expected to be filled by the closing of a significant funding round in the next few months”.
The accounts also warned that if the funding did not materialise “there is a possibility that the Company may enter into liquidation” – although the £1m lending agreement referred to in the 2014 accounts may have staved off that prospect.
The abbreviated 2014 accounts did not show PledgeMusic’s overall turnover or losses for that year, but they did reveal annual losses for several subsidiaries – including a loss of £1.91m by PledgeMusic.com USA.
As a fundraising platform for artists, PledgeMusic remains active: Primal Scream, KT Tunstall, The Feeling, Marillion, Rick Wakeman, Violent Femmes, Rob Zombie, Future of the Left, Sum 41, The Jayhawks, Status Quo and Tiffany are all currently using it.
Now Magna will be taking a greater role in PledgeMusic’s future, although the company stuck to general hopes in its statement on the investment – which came alongside other deals involving short-form video platform Ocho; documentary film The 50 Year Argument; and drama Bleed For This.
“Content has never been more in demand, nor more accessible through an abundance of new platforms,” said Rieger.
“We bring a new perspective to investments in the space, but also communicate the needs of investors and the financial community to the corridors of the entertainment industry. We see ourselves as a bridge that is uniting both approaches and perspectives.”