You never know who's listening. I once helped a singer/songwriter playing a weekly 4-hour cover gig at the local speakeasy secure a $100,000 investment from one of the regulars there. You don't need 1000 fans to pay you $100 a year. When someone approaches you for something like this, you should know how to go about securing this. 

 Typically, someone who has this kind of dough to invest in you isn't doing it to make money. The investor is doing it because they want to help you succeed. They aren't giving you a loan. It's an investment. A risky one at that. And they know this. So the proposal you put together should indicate that this person could make good money if you explode. 

Set it up so that you don't have to pay back any money until your annual net income surpasses a set amount of $30,000 per artist member (before salaries). Now, this is net income after all expenses. So, if you have four band members, you will start to pay on the investment after your annual net income surpasses $120,000 (so each band member makes $30,000 minimum this year, $33,000 next year, $36,000 the year after, and so forth. So, if your investment is for $100,000 with a term of 10 years, you have to make a minimum of $30,000 net income your first year to pay anything to the investor. If you make $25,000 (after expenses), you pay nothing. If you make $33,000, you pay a percentage of $3,000 

It's fair to pay 25% of your annual net income (above the base). So, in this example, if you made $33,000 net in your first year, you would pay $750 (25% of $3000). If you also made $33,000 your second year (and $33,000 was your base your second year), you'd pay $750 your first year but $0 your second year. 

Your investors still want you to succeed, and they also will want to come along for the ride. So, in addition to giving the investors a percentage of your earnings (above your base), give them perks like free tickets, VIP experiences, or shoutouts. 

This may sound informal, but you're going to have to enter into a carefully drafted written agreement that sets out all these details and requires you to report to your investors periodically. It is essential to understand that any investment arrangement implicated federal and state securities laws. You absolutely should not do any deal like this, no matter how little money is involved, without the help of a lawyer who knows this area of the law. 

How to Waste An Investment

Once you secure the dough, don't blow it on dumb purchases like vintage gear or expensive music videos. Approach your career with the income it is currently generating. Treat the investment as a true investment in your career. How can it best grow your audience? How can you use $100,000 to generate $150,000? A $4000 guitar and $2000 amp is not how. A $15,000 music video with no marketing behind it will go nowhere. The money would be best spent developing your studio. Instead of spending $5000 per video, you spend $10,000 and purchase higher quality cameras, lights, audio equipment, editing, and recording software. You become an expert on how to use it all ( or have one of your band members learn this) and then pour the rest into marketing. 

And remember, the 50/50 breakdown-- 50% of your budget goes to production; 50% goes to marketing. Whether you're working with $500 or $500,000, this is the ratio.