Trapital - investing in Africa
investing in Africa Hey! I had a great time in Austin. SXSW may not be as busy as it was pre-pandemic, but was still great to see people. This week’s Trapital podcast episode was a breakdown on the opportunities and challenges facing African artists, entrepreneurs, and investors. Our guest is one of the most well-known figures who wears all three hats: Mr Eazi. Here are a few highlights from our chat.
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investing in both artists and musicMr Eazi models himself after Jay-Z. He was inspired by Empire State of Mind (written by friend of the Trapital Podcast, Zack O’Malley Greenburg). The alignment between music and business attracted him to pursue both. emPawa Africa is his Roc Nation. It’s a talent incubator turned music service company with management, publishing, and distribution. Zagadat Capital is his Marcy Venture Partners, investing in startups across the continent. This is right in line with artist-market fit, the artist sales funnel, and several topics we’ve covered often at Trapital. “Every artist is a product… you figure out what your unique value proposition is, your loyal customers, the idea, and you take it to market and test it.” – Mr Eazi The upside is high for both artists and founders in West Africa. If an artist takes off and becomes the next Burna Boy, Wizkid, or Davido, the sky is the limit. With EMPIRE and Audiomack, there are record labels and music streaming services making moves. The same is true for startups. VC firms have made bigger investments. But the high reward comes with plenty of uncertainty and challenges too. Listen to the full episode or read below for more. opportunities and challengesDespite the growth, Africa needs more funding to support its tech ecosystem. “It’s not a lack of ideas that’s the problem, it’s getting funding, especially locally. There’s not a lot of local funding sources.” – Mr Eazi In the United States, friends and family rounds are common. They help offer that safety net that gives founders time to build and develop a real product. These rounds are much smaller for many founders in Africa, which slows down the sector. The music industry faces even more problems. It is rarely taken seriously. Africa’s creative sector still isn’t taken seriously by many of the continent’s business leaders. It’s a lack of awareness that’s fueling their criticism too. “To collect publishing revenue, you need the government to enforce the laws… but in a lot of African countries, people still look at the creative sector as a joke.” This sparked a lot of discussion on both Twitter and LinkedIn, with people sharing their own perspectives. A few years ago, Mr Eazi spoke on a panel hosted by an African financial institution with a $500 million fund to invest in the creative sector. He said that the institution’s president said, on panel, that protecting music IP was difficult, if not impossible. Yikes. Tough to hear from someone controlling that much capital. These beliefs hurt everyone. But I’m curious to see what happens as artists like Drake and Ed Sheeran have sampled Afrobeats music, and whether that changes anything. It shouldn’t take Western influence to create change, but that’s an unfortunate trend we’ve seen. “There needs to be more education (in Africa), just like with startups, for people to realize music is a business. There’s revenue to be earned, not just live, streaming and publishing too — especially now that the world is looking into Africa.” equity in artist’s careersMr Eazi’s emPawa Africa takes equity stakes in artists’ careers. The firm’s not looking for a one-time exit like a startup, but “exits” from the business launches. This offers more flexibility. He plans to make money from their revenue in live shows, merch, streaming, sponsorships, and more. There’s also money to be made off the IP if artist’s work is sampled. Major labels can also strike a deal with Mr. Eazi to “upstream” the artist. There are similar themes to 360 deals, but the biggest issue about 360 deals is that they took a cut of revenue from business lines that record labels didn’t add value to. If true value is added, beyond what an artist could do otherwise, then it’s a different conversation. We’ve seen similar models from Coop Records and other firms exploring alternative options. Personally, the flexibility of today’s era excites me the most. If an artist has always wanted to be signed to a major record label, they can pursue that option. If they want an advance on streaming royalties or an investor who doesn’t own any assets, they can pursue that too. There’s no one right path for all artists. That optionality is especially important for artists (and founders) in Africa who are making moves. Mr Eazi and I covered a lot more in the podcast:
Listen to the full conversation here.
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Or share Trapital quick via text, email, or Twitter. coming soon from Trapital Podcast: the short-form video wars. This is a breakdown on TikTok, Instagram Reels, and YouTube Shorts opportunities in music, with Tati Cirisano. Drops next week! |
Key phrases
Older messages
the price is wrong
Tuesday, March 14, 2023
Trapital Memo: music streaming has a pricing problem
gaming’s big moment
Thursday, March 9, 2023
Trapital Podcast: the future of music and gaming (with Vickie Nauman)
monetizing self-expression
Tuesday, March 7, 2023
Trapital Memo: people say "music industry should learn from gaming" but what does that actually mean? let's break it down
the rise burna boy
Thursday, March 2, 2023
a case study style breakdown on Burna Boy's rise (with Denisha Kuhlor)
the trends that last
Tuesday, February 28, 2023
Trapital Memo: which trends in music are here to last, and which were zero interest rate phenomena?
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