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A key moment for any start-up business is receiving the first tranche of investment from someone outside the original backers.

MusicHype's announcement of a $600,000 input from Christchurch-based NZ Capital Strategies' Rutherford Innovation Fund is, at the very least, a serious indication that an outsider thinks its idea is good.

The one year old Wellington company's 'offer' is a way connect music fans and bands - rewarding fans for their love of a particular artist(s), and enabling the musicians themselves to make money from exclusive merchandise, tickets, digital downloads and other products.

Relatively unusually for a start-up, the company nudged itself into a breakeven position towards the end of 2010.

initiative is a play in the mixed up world of music, where 'free' is ubiquitous, new bands struggle to be noticed in a crowded internet space, and their ability to survive while being able to produce music is a completely different game compared to the past.

sticK profiled the start-up late last year (see here), including the news that it has been invited to the world's largest digital music event MIDEM, at Cannes, France, later this month.

MusicHype's chief executive Jeff Mitchell is to pitch to MIDEM's live audience, as well as a panel of international judges. The six day event attracts over 7,000 delegates, across 60 pavilions, with 120 conferences, 3,200 companies and over 400 journalists.

The event will be another opportunity for MusicHype to showcase its 'social commerce' platform. Almost concurrently, Mitchell and fellow founder Annabel Youens are setting up a permanent office in Los Angeles, using the $600k investment to help scale up its web-based platform in North America.

MusicHype's 'secret sauce' is its proprietary 'Appreciation Engine'. This tracks fans' activity across social media services like Facebook, Twitter and Last.FM, rewarding them for promoting bands they love. In turn MusicHype increases the direct revenue for artists and labels through ticket sales, merchandise and other music related products.

And while MusicHype's pitch is initially in music, the intellectual property behind its 'Appreciation Engine' applies across other sectors as well.

Being able to firstly understand, and then tap into social media and its influence on consumer behaviour is one of the goals of literally hundreds of internet start-ups around the world.

MusicHype's convinced an initial outside investor it has the particular key to unlock that treasure chest.

In the world of the web, a year's a long time.

That may well be all the time required to see whether MusicHype takes off and can mine the mother lode.

Watch this space.

Being shown the money, MusicHype heads to America to make its play

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