Music Firm Finds a Bank That Listens
As a small business lacking the funds required to reach new customers, I Like Music needed a banking partner who could grasp their potential.
- Company turnover: Circa £1-£1.5 million
- Sector: Music
- I Like Music owns a fully licensed music archive and has developed a range of technological innovations aimed at both business clients and consumers.
- Having invested in creating several new products, the company needed to build its management and marketing team.
- Funding offers from the venture capital market were expensive, while the banks the company approached were either unwilling to lend or else could not grasp the potential of the company’s products.
- Santander provided debt finance in the form of a £700,000 Breakthrough Growth Capital loan and a £50,000 overdraft. The bank understood the company’s potential and could provide funding without requiring an equity stake.
- I Like Music has since recruited several new team members and is now looking to export, an ambition further supported by a Breakthrough International trade mission. Chief Executive Andy Hill has since become a vocal advocate for the Breakthrough programme.
I Like Music has its origins in one of the world’s most extensive record collections. Assembled by veteran British radio producer Phil ‘The Collector’ Swern, the collection includes every Official UK Top 40 single since the charts began in November 1952, as well as music from every conceivable genre. Business partner Andy Hill, a former IBM executive who specialised in digital music, spent several years gathering licenses so the collection could be exploited commercially. This process included digitizing the entire collection to create an exhaustive online music library. This archive is currently used as a source of music by several broadcasters, including the BBC who has over 10,000 registered users. “In a way we are the iTunes of the B2B world, with plans to grow our consumer propositions” says Chief Executive Andy.
A company that thrives on creativity, I Like Music has spent the last few years developing new ways of utilising its key asset. During this time it agreed to provide music for greetings card company Funky Pigeon, created a ‘Virtual Jukebox’, which allows pub-goers to select tracks from a mobile device, and devised a ‘Soundtrack Of Your Life’ service, which allows users to compile an album of number-one hits from every birthday since the user was born. Having assembled this wide portfolio of products, the company now needed to boost its sales and accounts management teams in order to take those products to the widest possible market.
Andy approached several banks, but each one either couldn’t grasp the value of the company’s virtual assets or else considered the business too small to warrant the kind of investment they were looking for. However, thanks to a local contact, I Like Music did catch the ears of Andreas Soteriou, a Relationship Director from Santander Corporate & Commercial. “I spoke to an introducer who knows the business who asked if I would like to speak with them,” says Andreas. “They [I Like Music] provided information and it looked interesting and quite unique, not something I had dealt with before.”
The Santander team impressed Andy upon his first meeting with them. “The expertise of the people who came in from Santander was completely different from the other banks,” he says. “These were people that wanted to understand our business. They genuinely wanted to help. They could see the frustrations of a small business. They also understood that a small business needs time to do things.” And those first impressions remained as the team got to work with his company. “They did all the right things,” says Andy. “They did the commercial due diligence, the financial due diligence, all the things we would have expected them to do to the point where we concluded a deal with them.”
The Breakthrough programme
Having assessed the company, Andreas enlisted I Like Music in Santander’s Breakthrough programme, a funding and support initiative aimed at small to medium-sized businesses that are growing quickly and yet struggling to access finance. Together with Santander Growth Finance Director David French, Andreas provided I Like Music with £700,000 of Breakthrough Growth Capital funding, which is an interest-only mezzanine debt solution with both a low debt servicing cost and minimal impact on cashflow. Santander also provided the company with a £50,000 overdraft. The overall package was tailored to meet the company’s limits as well as its requirements, as David explains. “The financing we’ve put together is structured to lend against their current core business revenues, such as supplying the BBC and advertising agencies, which we regard as quite stable cashflow. This has enabled the company to invest in taking other new products to market.”
The Breakthrough funding has since enabled I Like Music to take on 10 more employees. “The [Breakthrough] funding enabled us to build a team with the right expertise to take the innovations to market,” says Andy. “One of our frustrations is the time it takes to get to market. One of the ways you shortcut that is to bring somebody on board who knows the people who can take it to market quickly.”
Aiming to export
I Like Music’s growth ambitions are not limited to the UK, and, again, Santander were on hand to lend support. Shortly after accepting the Breakthrough funding deal, Andy was invited to take part in a trade mission to the United States courtesy of Breakthrough International, one of several pillars of the Breakthrough programme. Andy describes the trade mission as “brilliantly organised” and which “got us into the biggest market in the world probably a year earlier than we would with our current resources.” He considered it a valuable extra to the overall Santander funding package, especially since the whole expedition was arranged on his behalf. “When you’re a small business, people don’t understand that you have to book the flights, book the hotel, book the appointments, book the meals,” he says. “Making all those arrangements is incredibly time-consuming for a small business.”
Having taken I Like Music’s growth plans up a notch with help and funding from Breakthrough, Andy has unsurprisingly become a prolific supporter of the Santander programme. In May 2013, he was a guest speaker alongside Santander CEO Ana Botín at a Breakthrough reception hosted by the All-Party Parliamentary Group for Trade & Investment. That summer he also took on a Breakthrough intern from the Royal College of Arts. When asked what it was about Santander that inspired him to become such a committed advocate, Andy’s answer is simple. “Santander was the only bank we spoke to who understood the potential of our business.”
What is Breakthrough?
Breakthrough is a programme of funding, business support, events and consultancy to help high-performing small and medium-sized enterprises (SMEs) leap to the next level of sustainable growth. Taking part in Breakthrough does not guarantee access to all elements, as each programme is tailored to meet the individual requirements of the business. To find out more, register your interest, and to see if you are eligible, visit the Breakthrough website: www.santanderbreakthrough.co.uk.
Lending is subject to status.
Download this client story as a PDF file (64.4KB)
Relationship Director Comments
We have lent I Like Music money that it can afford to pay back through the operations of its core business. The company will use this money to invest in hiring people and launching new services.