A short time ago in a galaxy not-so-far-away, a new culture took the world by storm. It struck a chord with those tired of 9-5 , creative frustration and perhaps even unspent romanticism. Believers hailed this new culture and held its reins. Innovative and incredibly hardworking, they had a burning desire to turn ideas into something material- something everyone could understand, something everyone could buy. These pilgrims of a new culture clustered in places all over the world. Entire regions thrived on the markets thus created. There was a time when a few big corporations had effectively controlled creativity and innovation. Not anymore- creativity was now open-source. Followers were empowered to collaborate, not compete. Small groups of passionate individuals the world over were starting out their own mini-enterprises (often in their garages) and viably selling, in essence, an idea of liberation, independence, fun and excitement. Some of these became behemoths, sure to be remembered for years to come.

Crucially though, a new industry evolved around this culture- the industry of financing creativity. A new way of thinking had created a new wave of optimism. This in turn led to a new wave of that thing that makes the world go round- capital.

I’m not writing about startups here. I’m not talking about pioneers of the information revolution such as Bill Joy, Bill Gates, Peter Thiel or Larry Page. Neither am I describing Silicon Valley, the tech boom of the 90s or the rise of venture capital.

I’m actually referring to the rise of rock and punk bands back in the 60s and 70s. Humor me for a moment. Acts like The Beatles represented a breed of music that was literally unheard of before – critics once felt they were ‘god awful’, even ‘appallingly unmusical’. Acts like Joy Division and the Sex Pistols represented frustration with a mechanical and gloomy age in an industrial backdrop. Hard rockers like the Rolling Stones and ACDC were representations – heavily drug and alcohol infused ones – of the excitement of unhinging oneself from all that is conventional, tried and tested.

The movement represented a set of ideas. These were sold as songs to start with but rapidly branched out into tapes, vinyl, magazines and eventually fashion. Financiers arose to the opportunity – the Sex Pistols, for example, were one of the major initial successes of the Virgin record label. This was the new culture and a whole new industry was created with bands at the forefront, backed by record labels. I need not write about how successful this process was because its legacy surrounds us, be it through music, guitars or blue jeans.

What baffles me is the extent to which the rise of bands in the 60s is analogous to the rise of startups from the 90s to present day. Liken a startup to a band- both require highly creative and productive people to be successful. Both start out small, often in backyards or garages. Most importantly, I daresay that conventional creditors such as banks view both with similar hesitation as potential investments. This is key- a massive industry has evolved to finance the innovation process, both in music and in technology today. Record labels were to music what VCs, accelerators and the like are to startups today.

Is this parallel of any use, though? The problems of financing bands were ‘solved’ a few decades ago, when the VC industry was still a fledgling. The music-financing process thus has an evolutionary trajectory that is traceable. It can teach us a lot about the future evolution of the startup-financing industry that is taking off again today, as the world recovers from the Great Recession.

In part 2, I will discuss this a bit further by examining the problems of financing music over the past decades, their resolutions and whether this helps preempt the problems of financing startups in the years to come.