Inside the deal: How REC Philly landed music mogul Sean 'Diddy' Combs as an investor

For REC co-founders Dave Silver and Will Toms, it’s all about who you know.

The old adage rang true when their connections helped land them access to rapper Sean “Diddy” Combs and his venture capital firm Combs Enterprises. The VC recently led a $2 million investment in REC, funds that will help fuel the Center City creative services startup’s expansion into Miami.

“It’s a story of relationship building, really,” Toms said of the deal, which took about two years to close.

Their first connection came by way of Combs' music manager Frank Santella. Silver met Santella while they were both students at Temple University. The two became friends and often put on basement concerts with a hip-hop group that Santella represented. Santella went on to intern at Combs Enterprises, eventually rising through the ranks to become Combs’ music manager.

The idea for REC came in part from those shows with friends, many of whom were musicians or performers struggling tofind affordable recording studios. Wanting to build up young performers in the city, they began organizing concerts, working with artists and generating content. Seeing a need to provide creators access to resources in Philadelphia, Toms said REC’s business model was built on fostering local talent so that creators didn’t have to travel to creative hubs such as Atlanta, Los Angeles or New York in search of success.

REC, which stands for "resources for every creator," seeks to cultivate the talent and careers of local creatives through educational programming and resources. Launched in 2015, it currently has about 1,000 members at its 901 Market St. location in Philadelphia.

REC has co-working space, design studios, editing suites, equipment for recording and podcasting, as well as rehearsal and performance spaces, plus a 250-person venue available. Within REC, Silver and Toms also operate a creative agency through which they've partnered with brands including Comcast, Live Nation, Temple University, T-Mobile and WXPN.

In November 2020, Silver and Toms made their second connection to Combs when they met Lynzie Riebling at an educational panel. Riebling is the vice president of insights and strategy at Revolt Media, which is among Combs Enterprises' holdings along with record label Bad Boy Entertainment, spirits brand Ciroc Ultra-Premium Vodka, and apparel company Sean John. After meeting Silver and Toms and getting to know their REC concept, Riebling put them in touch with Tarik Brooks, president of Combs Enterprises.

When the duo began talking to Brooks about their startup, both parties noticed an overlap in vision, prompting Brooks to fly out for a tour of REC's Center City space.

“After that connection, we were able to leverage our existing relationship with Frank to cultivate the initial interest into the final deal that we have today,” Silver said.

Last year, Silver, who is also REC's CEO, got a call from Santella about an idea Combs had to launch a creative space in Miami.

Brooks, who was born in Chester, said he was "blown away" by what he saw at REC. “It was both the kind of uniqueness and sophistication of the business model and just the energy in the building. You could see that the place was bursting at the seams with creative energy and talent.”

Combs Enterprises was looking to invest in a scalable venture, Brooks said, noting he was impressed with REC's ability to retain and grow membership during the Covid-19 pandemic.

“Not only was there a special thing being [created] in Philly, when you dig into the business model you can see it is a model that scales, and it’s a model that you could see in major cities across the country because what it takes is the vision to be able to create the community,” Brooks said.

There was clear alignment between the vision for REC and Combs' goals of providing access to equipment and opportunities for creatives.

“One of the things that Mr. Combs says a lot is he wants to be able to give people, particularly people from communities that have been historically disadvantaged, the same 24 hours as everyone else,” Brooks said. “He wants to [level] the playing field. So that kind of thinking was really exhibited in real life in the building at REC Philly.”

After about two years of back and forth, which included meetings, site visits and due diligence, a deal was struck for Combs to be the lead investor in REC's $2 million fundraising round. Brooks declined to disclose Combs Enterprises' equity stake in REC.

When the deal finally closed, it was a powerful moment for Toms, an Indiana University of Pennsylvania graduate who grew up admiring Combs as a creative and a businessman.

“For him to understand what we’re doing and why it’s important and to care enough to invest, to be able to lower that barrier to entry for a whole new generation to be able to walk somewhat in his footsteps with a whole new world of opportunity with where the creative economy is today, I think that moment was just like, wow.”

REC Miami is expected to open in 2023 in a 12,000-square-foot space in the city's Little River neighborhood. The facility will feature similar amenities to the flagship Philadelphia location, such as recording studios, editing bays and production space. They expect to hire between 10 and 15 people to work there.

“There will be opportunities for [Combs] to be very hands on, engaging with these creatives as the platform grows,” Brooks added.

As REC prepares to undertake its Miami outpost, Silver and Toms look forward to the possibility of continued expansion in other cities. Toms stressed the value of Combs' future involvement because "the cities that we want to be in, there’s key artists in each of those markets that are only a phone call away from the rolodex of Diddy..."