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SMALL BUSINESS | FINANCE AND INSURANCE

Music Publisher Gives Bank an Education, Lands the Loan

April 28, 1999|JUAN HOVEY

There are no shortcuts in the search for outside capital, but there is such a thing as the smart search.

Take, for example, the way Larry Robinson did it.

A 15-year veteran of the music business, Robinson owns Avatar Publishing Group, a boutique Los Angeles music-publishing company that specializes in black music. Among the big-name works in Avatar's catalog are songs by Vanessa Williams, Boys II Men, Tony Toni Tone and Tupac Shakur.

Robinson's ambition is to establish Avatar as the leading publisher of American R&B and rap music, marketing the work of performers and songwriters to the film, television and advertising industries--"synchronization licensing," in the parlance of the business.

A year ago, however, Robinson realized that Avatar lacked what he calls critical mass--a catalog of artists and work large enough to make Avatar the source for the music of black America.

He also realized that to gain that mass, he would need help--a goodly chunk of outside capital. The question was where to find it.

Robinson focused on a source close to home, Founders National Bank, headquartered in the Crenshaw area of Los Angeles. After a careful campaign spanning nine months, he succeeded.

How? As detailed in this space previously, Founders is one of many often-overlooked financing sources, public and private, seeking to foster growth among businesses owned by women and members of minority groups.

Robinson, who did his business banking at Founders, tapped into that effort, but he also made sure the bank saw his plans as a source of profit.

He started with a deliberate campaign to educate his bankers about the music business: When he signed a new performer or songwriter or licensed part of his catalog in a synchronization deal, he told his bankers of his success.

"I thought it would prove critical to keep them aware of what I was doing," Robinson says. "I faxed them about new deals, about new contracts with songwriters and performers. I even sent them a sample CD of one of my artists."

The campaign paid off when Robinson sought a line of credit to finance, among other things, a video project. The bank wanted a personal guarantee, of course, and Robinson didn't hesitate. He signed--and then set about making sure his bankers saw that he handled this obligation with the same careful deliberation he had shown in educating them about his business.

That, in turn, paid off last year when Robinson approached the bank about a six-figure loan to acquire a music catalog called Whole Nine Yards, which contains the music of such performers as Anita Baker, Keith Sweat, Bell Biv DeVoe, Patti Labelle, Stephanie Mills, Al B. Sure and many others.

At the time, the bank had just come under the control of an investor group including singer Janet Jackson; former Los Angeles Laker Magic Johnson; and Jheryl Busby, head of the urban record division of DreamWorks Music, a division of DreamWorks SKG.

Busby's background, Robinson thought, would make him a natural ally. So he took Busby to breakfast, described his project, and asked for his backing.

It was, in the end, simple--because Robinson had laid his groundwork carefully. Busby knew the music business, and Founders knew Larry Robinson and his business. Busby signed on, and Robinson got his loan.

"It took more time to arrange the line of credit than it did to get the money for the Whole Nine Yards catalog," Robinson says. "Jheryl Busby came into the scene in time for me to acquire the catalog, and the bank would not have done the deal without his blessing.

"But I had laid the groundwork. I had a track record at the bank, and I never thought about searching for capital anyplace else."

In the first two months after gaining control of the Whole Nine Yards catalog, Robinson matched the synchronization income generated by the Avatar catalog in all of the previous year.

Robinson wants to triple the synchronization income this year, and he has more acquisitions in mind to give Avatar the heft it needs.

"My growth strategy is to buy more catalogs, piecing together reasonably priced acquisitions until Avatar becomes known as the place to go for this kind of music," Robinson says.

"There is no lack of capital. There is a lack of good ideas--and capital chases only good ideas. My job is to find acquisitions that make sense, and if I have the track record, I have no doubt that my backers will be there for me."

*

Columnist Juan Hovey can be reached at (805) 492-7909 or via e-mail at jhovey@gte.net.

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