Carl Barat dances to venture capitalists' tune

Ex-Libertines frontman joins growing number of artists hoping to bypass record labels

"That was like performing on Dragon's Den," says Carl Barat after perhaps the strangest gig that the Libertines frontman has ever played.

He has just entertained an elite crowd of 20 venture capitalists in a swanky Soho hotel, who are considering whether to invest their hard-won millions in him. The singer performed after the "dragons" had listened to a presentation by the chairman of Power Amp, an investment firm specialising in the music industry, which is offering a tax-efficient opportunity to back a select number of established artists.

With CD sales continuing to decline and record companies no longer willing to shower musicians with multi-million pound deals, artists are having to seek innovative ways of funding their careers – even if that means placing their punk rock credibility on the line to impress private equity experts and institutional investors.

Barat, who previously recorded for EMI and Universal Music, has signed a £500,000 "multi-revenue stream" agreement with Power Amp. The deal helped fund the recording of his first solo album and the two parties share in "income opportunities" ranging from recording, publishing and touring to merchandise and sponsorship.

Power Amp staged the Barat event in a bid to raise a further £10m from wealthy figures who retain a taste for rock music.

A similar deal with Madness achieved a return on investment of nearly 30 per cent, with the band's net live income rising by more than a third. Barat peformed a song from his solo album and a Libertines track. "I hope you understood that presentation as much as we did," he joked. The "dragons" however, immediately raised the spectre of his absent co-Libertine, Pete Doherty.

Would the investment cover the return of the Libertines too, asked one. "It includes a meaningful amount from Libertines gigs," said Tom Bywater, Power Amp's chief executive.

Barat told The Independent: "This is all about being independent. I get to have my own record label and decide what to spend on marketing and I retain the intellectual property. If you're signed to a major label and Britney's record comes out the same week, then yours goes down the gurgler."

But has he grasped the new rock language of 20 per cent income tax relief and mid-term exit proceeds? "I understand the basic concept and it's the best deal I ever had. Having investors does perk you up a bit in the studio. You don't want to mess it up."

However, as the Power Amp brochure also warns, artist investments "are not guaranteed to succeed". A £2m deal with Charlotte Church was abandoned after the singer's comeback album Back To Scratch flopped last year.

Barat, who hopes to record a new album with Doherty, claims "the ice is cracking in the music world". "There's no need to sign to a major label," he says. "You have to be your own king of the castle. You can't only be the Duke of the Duchy. You've got to own the whole Duchy."