Tunezy CEO Derrick Fung says sites like New York-based Kickstarter, a crowd funding website for creative projects like films and video games, have proven you can raise money by appealing to fans. When Intertainment Media (TSXV:INT) received final approval from the TSX Venture Exchange last summer for a private placement of nearly $24-million, it was one of the largest non-brokered financings of the year.
The cash-injection instantly installed a base value to high-flying Toronto-based social media junior, whose Ortsbo translation software has since passed the 162-million unique user mark.
In the time since, Intertainment has used the money, in part, to invest in other companies. This past April, the company took a piece of Israel-based Lexifone Communications Systems, which develops voice translation technology. Prior to that, Intertainment provided debt-financing in a joint venture with fellow Canadian social-media pubco Poynt (TSXV:PYN).
Last Friday, viewers of BNN’s “The Pitch” got a chance to get an up-close and personal look at another of Intertainment’s investments; Tunezy, a social media music site that launched in January. CEO Derrick Fung had ninety seconds to impress the show’s judges, Sarah Prevette, CEO of Sprouter, Probal Lala, founding member of Maple Leaf Angels, and Phillip Brown, CEO of Brown’s Dining Solutions. Tunezy was looking to raise $500,000 for expansion capital.
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Fung said Tunezy came about because of a simple problem; people aren’t buying music anymore. Pointing out that music sales have fallen more than 50% in the past decade, the timing is right for a solution that can monetize music in a social media era, he says. Tunezy says Fung, is different because of a patent pending virtual currency called “notes”. Fans can earns notes by listening to and sharing music, they can then use the currency to purchase live concerts, custom merchandise and meet and greets.
The initial targets of Tunezy, says Fung, are independent musicians who aren’t signed to major labels. He says sites like New York-based Kickstarter, a crowd funding website for creative projects like films and video games, have proven you can raise money by appealing to fans.
A recent deal with David Choi, and unsigned musician who has more than a million followers on Youtube is an example of the type of win-win solution Tunezy can offer both fans and musicans, says Fung. Tunezy helping promote Choi’s Toronto concert in exchange for his agreeing doing a private concert for Tunezy users only.
Fung says Tunezy has raised capital in the low six-figure range and is burning approximately eight thousand dollars a month.