Los Angeles-based payments and distribution platform Stem has announced plans to provide $1.4 billion in artist advances through a new partnership with Chicago-based Victory Park Capital.
Eight-year-old Stem today officially announced his collaboration with Victory Park Capital, approximately 15 months after announcing a $20 million funding round backed by Tidal parent company Block, Hybe’s Quality Control and QED Investors. Following the launch of its artist advance offer in 2020, Stem is now poised to pay out $250 million to eligible artists, according to managers.
The present significant tranche will set the stage for “longer-term strategic and financial planning options,” Stem executives also said, specifically referring to progress on future music projects as well as past releases.
Additionally, the company, founded by Milana Lewis, took the opportunity to emphasize that it “provides advance funds for future projects without taking ownership” – a model that the company says is “having a profound impact” on the careers of certain indie had acts.
And on that front, Stem also cited his most notable advances to date, including a series of transactions with a Brooklyn-born artist Justine Skye. “In the space of 12 months, Justine and her team have taken out five advances, with the most recent loan taken representing a sixfold increase over the first in that period,” Stem wrote of the financial arrangement with the Ex-Major Label Act.
Building on this idea, Milana Lewis, Stem’s aforementioned founder and CEO, emphasized the goal of meeting a perceived market need by providing capital to artists who do not wish to sell their catalogs, as well as those (like Justine Skye) who do this exit from major label deals.
“This funding from VPC allows us to fill two major gaps that artists consistently face,” said Lewis, whose company has been offering a royalty service product to labels for about eight months. “The first gap is access to capital for those who aren’t quite ready to sell their catalog but want to use it for cash. The second option is investing in future music for those exiting the major label system whose catalog is currently tied but who have the opportunity to become independent for future releases.”
In November, roughly nine months after closing a $34 million seed round, beatBread announced “a $100 million institutional funding agreement” with Variant Investments. Most recently, in April, the artist-advance startup brought in Troy Skabelund, previously an executive at The Walt Disney Company, as CFO.
Also on the artist sponsorship side, Utopia Music acquired Lyric Financial (along with several other companies) in 2021. But the former company has since completed several rounds of layoffs, sold recently acquired businesses like ROSTR and Sentric, and is struggling with tax debt allegations – raising questions about its long-term plans for Lyric.