Spotify Raises $100 Million in Investment Round Led by Goldman Sachs

on Nov 16, 2012
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On 15 November Financial Times reported that Spotify has successfully concluded an investment round and has raised about $100 million (£63 million) from a group of investors led by Goldman Sachs. The company is now valued at $3 billion (£1.89 billion) – lower than the $4 billion (£2.52 billion) valuation initially sought by the management but three times higher than the last funding round, which took place a bit more than a year ago.

According to the New York Times, Goldman Sachs invested around $50 million (£31.55 million) in Spotify. Other notable contributors include Fidelity Investments, said to be chipping in about 15 percent of the financing round, and Coca Cola, contributing 10 percent. The rest of the funds were secured from Spotify’s existing investors including DST Global, Horizon Ventures and Kleiner Perkins Caufield & Byers.

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Coca-Cola’s investment, although still unconfirmed, was hinted at months ago when in April the company made a vague announcement about a marketing partnership with Spotify. Despite insignificant for the $162 billion giant, Coke’s $10 million (£6.3 million) represents a potentially massive new pool of investment sources for digital music. Most digital music companies have had a hard time building solid businesses and even Spotify, with its 15 million users around the world and 4 million paying subscribers, is still a lossmaking operation. In 2011 the company registered a $57 million (£36 million) loss on $236 million (£149 million) in sales.

**Spotify Expands to Seventeen Countries**
This week Spotify has finally launched its music-streaming service in Ireland and Luxembourg, and is now available in 17 countries. The newest two members claim some six million residents between them, who will be offered all the standard packages from the music service, including the free version, Spotify Unlimited for a monthly fee of €4.99 and the €9.99 Premium option, which allows users to listen to their music even when offline or on their mobile devices.

!m[](/uploads/story/831/thumbs/pic1_inline.png)With Ireland and Luxembourg already in the bag, rumours are the next two countries to be “spotified” will be Italy and Poland.
On Tuesday Spotify also announced it is developing an application for the new Windows 8 mobile platform. “I can confirm that we are working on it,” a Spotify spokesman said in an email. The spokesman could not say exactly when the app would be released, however.

**Deezer – Spotify’s French Rival**
Just a month before Spotify completed its investment round, Len Blavatnik, whose Access Industries group bought Warner Music last year, invested $130 million (£82 million) in Deezer, a rival French music streaming subscription service.
Deezer is in the middle of an aggressive expansion to some 200 countries, laying out plans to offer its services in every country apart from Japan and the US. Mr Blavatnik said Deezer was a “state of the art music subscription service with enormous potential”.
Deezer has about 26 million users, out of which around 2 million pay subscription revenues. The company, which has tie-ups with Facebook and the French mobile operator Orange, has been profitable since 2010.

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