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Varner Enterprises

A Diversified Holding Company
INVEST

82dd11hh

Time left to invest

min$10k

max$1070k

funding goal 

Reg CF

exemption used 

$2,800,000

pre money valuation 

$250.00

min investment 

$1,000

amount committed 

1

investors 

Security Type
SAFE REV
Simple Agreement for Future Equity AND Revenue Participation

SAFE:
$2.8 Mil Valuation Cap
REV:
20% Rev. Participation
4X Repayment Multiple

Pitch

Who are we

Varner Enterprises Inc. is a development stage holding corporation. As its first asset, the company acquired independent record label L2 Records. L2 is a wholly owned subsidiary that works with artists in the pop, EDM, and hip-hop genres.

 

 

L2 seeks like-minded and talented artists to develop into stars. We grow assets (our artists), monetize them through multiple channels, and position our assets for buy-outs or joint ventures with major labels. In essence, we follow the tried and true tech model where a small company reaches critical mass and is bought out, yet apply this paradigm to the multi-billion dollar music industry.

 

Problem

There will always be a need for new music. The music industry is dominated by three large players: Warner, Universal, and Sony. These three companies have a veritable army of talent scouts, known in the industry as "A&Rs," to help them discover and sign new talent. But even then, scouts for the major labels cannot be everywhere and discover everyone.

 

Also, because of the risks involved, the aforementioned major record labels typically do not take on undeveloped talent with no fanbase or traction on their own. In the past when there was more competition among major labels, they would sign emerging artists to "development deals" which were in essence mini recording contracts for a one or a few songs before potentially signing that artist for a more robust multi-album deal. These days are no longer, at least at the major label level.

 

Solution

Books

That's where independent record labels like L2 Records come in. We have our ears closer to the ground to discover talent earlier and develop that talent until they are "ready for the majors." It's like minor versus major league baseball: independent record labels like L2 take on the risk of signing and developing unproven but talented artists to hone their skills and grow their fanbase to the point where they are ready for the "major leagues."

Achievement & Traction

Varner Enterprises acquired L2 Records which, in its short operating history of less than one year, has already built a brand and industry reputation, has signed its first viable artist RIIV who has a solid catalog of singles, and has released RIIV's first single. This single has been used successfully to generate initial revenues through streaming (song and video), downloads, mass play and exposure, and building a social media personality with 10,000 followers.

 

 

Varner Enterprises has already proven that its marketing and promotion model can be executed efficiently and effectively with predictable results and is now ready to scale it provided the capital needed is raised.

 

Michael Varner has already met with major labels and key industry consultants and advisers to validate his implementation model, set up the right relationships, and have tangible objectives to target that will lead to the critical and highly desired major label co-development agreements.

 

Now launching a crowdfunding campaign and using InvestTechs, a digital agency with expertise in marketing multi-million raises, Varner Enterprises is setting the foundation to receive the necessary capital to execute its accelerated business plan in 2019.

 

Market

The music landscape globally is experiencing a shift in consumer demand and preferences. Following a 3-year consecutive growth period as a swing back from the 15-year decline, the independent music segment is leading the music industry into the future.

 

Global total revenues were recorded to have grown 8.1% in 2017 to reach $17.3 billion which was up $1.9 billion on 2016’s $4.7 billion. Physical music revenue fell 5.4% to $5.2bn, while download income dropped 20.5% to $2.8bn. Streaming represented the single biggest generator of revenue, representing 38.2% of the total $17.4 billion market in 2017 ahead of physical format at 30.1% and downloads at 16.2%.

 

The change in customer preferences was reflected in the 176 million users of paid streaming services worldwide at the close of last year, up 64 million users from 2016. This has led to fragmentation of production power to the independent music segment of the market industry with distribution partnerships with major labels like Sony and Universal. Running a record label is a high-risk business with an unknown reward. However, independent labels run a sustainable model that has driven its growth in the last 10 years.

 

Collectively, indie labels are now bigger than any major label, outranking them in terms of market share in a second straight year in the 3-year growth period between 2016 and 2018. Based on revenues earned, Indies took a 32.2% market share, outranking the $40 billion worth label, Universal Music group at 29.7%, Sony only took 21.9% of the market share while Warner music group took a 16.7% share

 

Revenues for 2018 showed an increase in market share for the Indies all round from digital to physical formats. Indies achieved a 39.2% while UMG acquired a 25.4% share. Indies also crushed the major labels in terms of publishing at an amazing 41.2 % market share while Sony was second with 27.3% and UMG with 19.8% and Warner/Chappell music finished last with 12.0% share Clearly, Independent labels are the future of the music industry and its deals partnership with major labels is opening newer channels of growth for the industry.

 

Competition

XL Recordings. XL Recordings is a British independent record label founded in 1989 by Tim Palmer, and Nick Halkes. It forms part of the Beggars Group. Although only releasing an average of six albums a year, XL has worked with Adele, Arca, Azealia Banks, Beck, Dizzee Rascal, Electric Six, FKA twigs, M.I.A., Gil Scott-Heron, Jungle, Giggs, Gotan Project, The Horrors, Jai Paul, King Krule, Nines, The Prodigy, Peaches, Radiohead, Sampha, SBTRKT, Sigur Rós, Tyler, the Creator, Vampire Weekend, The White Stripes, and The xx. The label releases albums worldwide and operates across a range of genres.

 

Big Machine Records. Big Machine Records is an American independent record label distributed by Universal Music Group, specializing in country and pop artists.

 

Business Model

Varner Enterprises will follow a very specific model to monetize and grow L2 Records and similar subsidiaries in the future.

The framework is based on:

  1. Creating a Brand Awareness and industry reputation for the Record Label. This will help scout and attract the best emerging talent
  2. Invest into recording, production, and marketing of the Artist Catalogue.
  3. Creating a following and Personality cult for each artist under contract
  4. Using the following revenue streams to monetize the assets developed (songs, videos, artists)
    • Mass promotion and early exposure through Social Media
    • Use standard content channels for Streaming songs and videos that generate royalties and Ad commissions
    • Setup distribution channels for direct sales and mediated sales in the form of downloads
    • Create a Radio Play campaign behind each artists using Professional Pluggers, and Michael's in-person appearances
    • Develop a revenue stream based on publication and Sync (endorsements, use of music, etc)
  5. Grow and prove the Artist's potential by hitting and exceeding key Critical Mass thresholds that tell Major Labels artist is viable
  6. Establish a Co-Development agreement with a Major Label in the form of a major cash infusion to accelerate and scale the promotion and artists catalog recording model.
  7. Once the artist has been fully developed, use the Co-Development agreement as the pivot to a Contract Buy-Out. That is the Major Label will Buy-Out in part or in full the artist contract and bring to bear the full scope of resources to "explode" the artist. In other words, Varner Enterprises and each of its subsidiaries will be like a Venture Capital incubator that invests at an early stage in an emerging and promising artist. Will grow and prove the artist and position it for a Major Buy-Out.  This also implies there is a ration of about 5:1, that is one out of 5 well-scouted artists will be breakthrough artists, the other 4 will have the varying capacity for monetization and growing/profiting from over time, and one or two will be considered loses over time.

The key qualities are the ability for Varner Enterprises to have exposure and the right leverage to scout and sign truly promising artists, and for Varner Enterprises have access to capital to execute on the full model (sign, record, market, promote, Sell Out) for each artist. It also means Varner must quickly build a portfolio of the promising artist to reach the first Co-Development contract in its first year.

Team

 

Michael Varner will rely on his extensive expertise gained from a long and admiral career in Corporate America, as well as the many years spent as a DJ and Music Insider where he learned the music business from many of the best as well as had first hand experience on how the music business works.  He has decided to run the company lean and thus will outsource and delegate specific activities to expert consultants and advisers and manage the process from the top. He will also be directly involved in what matters the most:

  • Scouting Talent
  • Developing Relations with Major Label executives
  • Finding the best Music Producers
  • Working on the Exposure and Distribution

 

In year two (or before if the need arises) Michael will fill key roles with permanent staff. He's already looking for key individuals that can bring unique expertise, passion, and dedication to Varner Enterprises and L2 Records.

 

Thus the current model is to be lean and agile while benefiting from the expertise of outside consultants to achieve the best results at this initial stage.

Use of Funds

Updates

Michael Varner
Michael Varner4 days ago
FOR IMMEDIATE RELEASE:
March 15 2019
 
L2 Records, anounced a new single "All Night," part of the catalogue of it's singed artist RIIV.
 
A demo of the single was leaked on social media in February and based on a positive response CEO of L2 Records Michael Varner decided to accelerate the release of the single. A 3 day recording session has been scheduled in Connecticut with Grammy recording engineer Chris Anger.
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Documents

Reviewed Financials View Download
Offering Statement View Download

Other Disclosures

Read the Form C filed with the SEC for other important disclosures, like financial statements, Directors, Officers, shareholders with more than 20% of voting rights, and more.
Irregular Use of Proceeds
The Company may make Irregular Use of Proceeds. Such Irregular Use of Proceeds, which may be in material amounts in excess of $10,000, may include by way of example and not limitation: Vendor payments and salary made to management, business associates, relatives, related parties and/or affiliates thereof; expenses labeled "Administration Expenses" that are not strictly for administrative purposes; expenses labeled "Travel and Entertainment"; and expenses that are for the purposes of intercompany debt or back payments.

Without limiting the above, the Company may elect to vary from the proposed use of funds as circumstances or assessments of circumstances following the closing change.
Special Note Regarding Forward-Looking Statements
This offering contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this offering, or which management may make orally or in writing from time to time, are based on the Company’s beliefs and assumptions made by, and information currently available to, the Company. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “would,” “result” and similar expressions, which do not relate solely to historical matters, are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties and factors that are beyond the Company’s control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. While forward-looking statements reflect the Company’s good faith belief when made, they are not guarantees of future performance. The Company expressly disclaims any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this offering may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We undertake no obligation to revise or publically release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.
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