Magic Instruments: High-tech musical instruments that make music playing accessible to everyone

Brian Fan

CEO

A lifelong musician, his business career has spanned technology, consumer marketing and finance, with roles at Microsoft, Expedia.com, P&G and Disney. Graduate of Juilliard and Wharton.

Mark Liebman

CTO

Has been making hardware and software for music, media, and computer graphics since he was a teenager for diverse clients such as Google, Federal Reserve, PARC, Pixar and National Geographic.

Andrew Song

Director of Marketing

Passionate about leveraging technology to democratize access to capital, technical careers, consumer products, and now music. Roles at Indiegogo and Massdrop.

Investor Q&A

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What does your company do?

Magic Instruments is passionate about turning everyone on to playing music.We design, manufacture and market high-tech musical instruments that entertain and educate users. Our instruments enable anyone, including people with little or no musical training, to express themselves by playing music, within minutes. We also provide a fun pathway for learning to play traditional instruments.

Where will your company be in 5 years?

Everyone wishes they could play music. But if you didn't start learning to play an instrument before the age of 14, chances are you never will. 90% of people trying to learn guitar quit in the first year. Not only is it hard to learn, it takes years of practice. In today's busy world, most people don't have a minute to spare.We combine technology and tradition to create musical instruments that lower the barrier to playing music. We want to see more people making and playing music together!

What problem do you solve?

So many people wish they could play music. Learning an instrument is really hard to do, and it takes a long time. To become an amateur level musician, it typically takes 2,000 hours of practice - an hour, every day, for over 5 years. In today’s busy world, most people simply don’t have a minute to spare. Furthermore, practicing is no fun - it is arduous, repetitive, uncomfortable and sometimes even painful. It’s no surprise that, according to Fender, 90% of people learning guitar quit in the first year, and 90% of kids learning guitar quit in the first four months.We’re solving this problem by creating instruments that are accessible for people of any age and musical background. Even if you have very little or no musical background, our instruments are designed so that beginners can play right away, get instant gratification and feel the joy of making music. For those with greater musical ambition, we provide an innovative, fun and easier pathway for people to learn to play a traditional instrument.

How do your instruments make it so easy to play music, instantly?

For our first instrument, a digital guitar, we 1) simplify the physical skills required, and 2) simplify the musical knowledge required to play.For beginners, the most difficult part of learning guitar is mastering chord fingerings, which takes countless hours of practice. Our guitar has buttons instead of strings, so it’s gentler on your fingers. Our proprietary “magic mode” enables people to play entire chords using just one button, so all you need to know is which button to push to play the right chord.The other difficult part of learning guitar is gaining the musical knowledge to know which chords to play for any given song. For example, a simple song might have four chords: C Major, F Major, G Major and A minor. A beginner has to learn what each chord means (and their fingerings) to play the song.We enable people to play even if they don’t have musical knowledge, by providing easy playing instructions for songs through our mobile app. You select the song you want to play (out of our catalog of thousands of songs), and the app displays the song lyrics, and the button number/location for the correct chords. As long as someone can find the right button on the fretboard (for example, the button on Fret 1, String 1 or Fret 3, String 2), they can play the right chords for the song.We’ve tested our guitar on over a thousand users, and everyone - including people who have never learned music or touched a guitar before - has been able to play their first song within 5 minutes. Of course, there is still practice required to play well, with confidence and expressiveness. But instead of it taking dozens of hours of grueling practice to play your first song, it takes only minutes on the Magic Instruments guitar.

1	Generated $415K in pre-orders on Indiegogo. Pre-sold over 1,200 guitars.
2	MI Guitar allows anyone to play music instantly and is a new, faster way to learn traditional guitar
3	Raised just under $2 million in seed funding
4	Graduate of Y Combinator, Winter 2016 class (world's #1 startup accelerator. Alumni include Airbnb, Dropbox, and Stripe.)
5	Graduate of Highway1, Fall 2015 class (Premier hardware startup accelerator located in San Francisco.)

1	Magic Instruments, Inc. is an early stage technology startup that is dependent on raising additional capital to develop, manufacture, distribute and market its products. There is no guarantee that we will be able to raise sufficient additional funding, and if we cannot do so, our ability to successfully launch our first product, and/or continue as a going concern may be adversely affected.
2	We have not yet launched our first product, a digital guitar, and companion mobile app(s). Although we have conducted substantial user research and successfully run a pre-order campaign on Indiegogo which indicates market demand for our product, the success of our first product may depend on a number of factors including: anticipating and addressing consumer preferences and demand, effectiveness reaching potential new customers and cost-effectively converting them into purchasers, effective forecasting and management of product demand, purchase commitments, and inventory levels, effective management of manufacturing and supply costs, and the quality of or defects in our products. The development of our product and services is complex and costly. Problems in the design or quality of our products or services may have an adverse effect on our brand, business, financial condition, and operating results.
3	The market for musical instruments and music education is competitive, with multiple companies offering a variety of competitive products and services. The easy-to-play music market has a many participants, including video games publishers, such as Activision (Guitar Hero), and Harmonix Music Systems (Rock Band). In addition, mobile app developers such as Smule offer products that enable musical beginners to make and play music. Guitar manufacturers such as Loog and Seagull offer easy-to-play guitars (with fewer strings than traditional guitars). The music education market is also competitive. Established guitar learning competitors include Ubisoft (Rocksmith), Fretlight and Zivix (Jamstik). Video guitar lessons can be found on YouTube and other websites such as Justin Guitar. Learning mobile apps include Yousician, Uberchord, and JamPlay. Our competitors and potential competitors may also be able to develop products or services that are equal or superior to ours, achieve greater market acceptance of their products and services, and increase sales by utilizing different distribution channels than we do. Some of our competitors may aggressively discount their products and services in order to gain market share, which could result in pricing pressures, reduced profit margins, lost market share, or a failure to grow market share for us. If we are not able to compete effectively against our current or potential competitors, our prospects, operating results, and financial condition could be adversely affected.
4	We will rely on a limited number of suppliers, contract manufacturers, and logistics providers. In particular, our first product will, for the foreseeable future, be manufactured by a single contract manufacturer in Asia. Our reliance on a sole contract manufacturer increases our risks since we will not have any alternative or replacement manufacturers. In the event of an interruption from our contract manufacturer, we may not be able to develop alternate or secondary sources without incurring material additional costs and substantial delays. Furthermore, these risks could materially and adversely affect our business if our contract manufacturer is impacted by a natural disaster or other interruption at a particular location. In addition, some of our suppliers, contract manufacturers, and logistics providers may have more established relationships with our competitors and potential competitors, and as a result of such relationships, such suppliers, contract manufacturers, and logistics providers may choose to limit or terminate their relationship with us. Accordingly, a loss of any key supplier, contract manufacturer, or logistics provider could adversely impact our revenue and operating results
5	We have limited control over our suppliers, contract manufacturers, and logistics providers, including aspects of their specific manufacturing processes and their labor, environmental, or other practices, which subjects us to significant risks, including the following: - inability to manufacture our products at the right level of quality; - reduced control over delivery timing and product reliability; - reduced ability to oversee the manufacturing process and components used in our products; - inability to satisfy demand for our products; - reduced ability to monitor compliance with our product manufacturing specifications; - reduced ability to develop comprehensive manufacturing specifications that take into account materials shortages, materials substitutions, and variance in the manufacturing capabilities of our third-party contract manufacturers; - price increases; - the failure of a key supplier, contract manufacturer, or logistics provider to perform its obligations to us for technical, market, or other reasons; - difficulties in establishing additional contract manufacturing relationships if we experience difficulties with our existing contract manufacturer; - shortages of materials or components; - misappropriation of our intellectual property; - exposure to natural catastrophes, political unrest, terrorism, labor disputes, and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured; - changes in local economic conditions in countries where our suppliers, contract manufacturers, or logistics providers are located; - the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and - insufficient warranties and indemnities on components supplied to our contract manufacturers. If there are defects in the manufacture of our products by our contract manufacturers, we may face negative publicity, government investigations, and litigation and we may not be fully compensated by our contract manufacturers for any financial or other liability that we suffer as a result.
6	Many of the key components used to manufacture our products come from limited or sole sources of supply. Our contract manufacturers generally purchase these components on our behalf, subject to certain approved supplier lists, and we do not have any long-term arrangements with our suppliers. We are therefore subject to the risk of shortages and long lead times in the supply of these components and the risk that our suppliers discontinue or modify components used in our products. In addition, the lead times associated with certain components are lengthy and preclude rapid changes in quantities and delivery schedules. We have in the past experienced and may in the future experience component shortages, and the predictability of the availability of these components may be limited. In the event of a component shortage or supply interruption from suppliers of these components, we may not be able to develop alternate sources in a timely manner. Developing alternate sources of supply for these components may be time-consuming, difficult, and costly and we may not be able to source these components on terms that are acceptable to us, or at all, which may undermine our ability to meet our requirements or to fill our orders in a timely manner. Any interruption or delay in the supply of any of these parts or components, or the inability to obtain these parts or components from alternate sources at acceptable prices and within a reasonable amount of time, would harm our ability to meet our scheduled product deliveries to our customers and users. This could harm our relationships with our channel partners and users and could cause delays in shipment of our products and adversely affect our operating results. In addition, increased component costs could result in lower gross margins. If we are unable to buy these components in quantities sufficient to meet our requirements on a timely basis, we will not be able to deliver products and services to our customers and users.
7	We collect, store, process, and use personal information and other user data, and we rely on third parties that are not directly under our control to do so as well. Our users’ data may include personal information such as names, addresses, phone numbers, email addresses, payment account information, age, musical ability, musical preferences, and data on music playing and learning. Due to the volume and sensitivity of the personal information and data we manage and the nature of our products, the security features of our platform and information systems are critical. If our security measures, some of which are managed by third parties, are breached or fail, unauthorized persons may be able to obtain access to sensitive user data. If we or our third-party service providers, business partners, or third-party apps with which our users choose to share their Magic Instruments data were to experience a breach of systems compromising our users’ sensitive data, our brand and reputation could be adversely affected, use of our products and services could decrease, and we could be exposed to a risk of loss, litigation, and regulatory proceedings. Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to our user data, we may also have obligations to notify users about the incident and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident. A growing number of legislative and regulatory bodies have adopted consumer notification requirements in the event of unauthorized access to or acquisition of certain types of personal data. Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another. Complying with these obligations could cause us to incur substantial costs and could increase negative publicity surrounding any incident that compromises user data. Our users may also accidentally disclose or lose control of their passwords, creating the perception that our systems are not secure against third-party access. Additionally, if third parties we work with, such as vendors or developers, violate applicable laws, agreements, or our policies, such violations may also put our users’ information at risk and could in turn have an adverse effect on our business.
8	We will sell our products through retailers and distributors and depend on these third-parties to sell and market our products to consumers. Any changes to our current mix of retailers and distributors could adversely affect our gross margin and could negatively affect both our brand image and our reputation. Our sales depend, in part, on retailers adequately displaying our products, including providing attractive space and point of purchase, or POP, displays in their stores, and training their sales personnel to sell our products. If our retailers and distributors are not successful in selling our products, our revenue would decrease and we could experience lower gross margin due to product returns or price protection claims. Our retailers also often offer products and services of our competitors in their stores. In addition, our success in expanding and entering into new markets internationally will depend on our ability to establish relationships with new retailers and distributors. We also sell and will need to continue to expand our sales through online retailers, such as Amazon.com. If we do not maintain our relationship with existing retailers and distributors or develop relationships with new retailers and distributors our ability to sell our products and services could be adversely affected and our business may be harmed.

Director	Occupation	Joined
Mark Liebman	CTO @ Magic Instruments	2014
Brian Fan	CEO @ Magic Instruments	2014

Officer	Title	Joined
Mark Liebman	CTO, Secretary	2014
Brian Fan	CEO, President, Treasurer	2014

Holder	Securities Held	Voting Power
Mark Liebman	2,800,000 common shares	28.6%
Brian Fan	4,200,000 common shares	47.8%

Date	Amount	Security
03/2016	$360,000	SAFE
03/2016	$500,000	SAFE
01/2016	$915,000	SAFE
01/2016	$20,000	Priced Round
01/2016	$100,000	SAFE
08/2015	$75,000	Priced Round

$50,000	We will use the funding to pay a portion of the cost of the injection molding and stamping tools for manufacturing. As our guitar is a large product, the molds are large and costly. The estimated cost of the molding tools is approximately $250,000.
$250,000	We will use the additional funding to pay for the full cost of the injection molding tools.
$500,000	We will use the additional funding to pay for the music publishing licenses and associated legal costs so that we can have a vast catalog of thousands of popular songs on our mobile app song catalog. The publishing advances and associated legal costs are approximately $250,000.
$750,000	We will use the additional funding to expand the team. We would like to hire one additional software engineer and one marketing staff to 1) accelerate our mobile app development, and 2) generate increased awareness of Magic Instruments.
$1,000,000	We will use the additional funding for working capital, to build our finished goods inventory for distribution and sales.

Class of Security	Securities (or Amount) Authorized	Securities (or Amount) Outstanding	Voting Rights
Debt Securities
Preferred Stock
Safe			No

Why you may want to support us...

Our Team

And Our Major Accomplishments

Why people love us

Some of our investors

we've raised $2,145,348 from 345+ investors since our founding

Downloads

Everyone Wants to Learn an Instrument

85% of US adults wish they had learned to play an instrument. Yet only 1 in 10 actually know how. We're making it easy for anyone to express themselves with music.

So We Designed a Guitar Anyone Can Learn

Beginners can actually play and sing along to their favorite songs in minutes

Magic Mode / Traditional Mode

Mobile App

Amazing Sound

Metal Strings

We're Sold Out!

We just launched in April and cleared our Indiegogo goal by 753%

Designed for Both Beginners and Professional Musicians

Play and sing your favorite song with just a few minutes practice or use our software to learn advanced guitar techniques and music theory

We invited some beginners in to try the MI Guitar. Check out their progress after ~1 hour

Even Grammy winners play and write songs on the MI Guitar

Our Journey Since April Launch

Let's Teach Guitar Together!

Investor Q&A

Financials

At a Glance

Risks

Details

The Board of Directors

Officers

Voting Power

Past Equity Fundraises

Outstanding Debts

Related Party Transactions

Use of Funds

Capital Structure

Form C Filing on EDGAR

Whats Happening?

6 Days Left Till Close! (12/21/16)

Magic Instruments featured on Crowdfund Insider

Part II

We hit $100K! Introducing "Learning Mode"

We hit our tier one goal of $50K! Here is a video of Randi Zuckerberg (yup, that Zuckerberg) rocking on the Magic Instruments Guitar.

Join our group of rockstar investors (literally) Part 2

Join our group of rockstar investors (literally)

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