Spotify raises $250m in new funding round
Deal values London-based music streaming service at more than $4bn
Music streaming platform Spotify has raised $250m in a further round of financing, making it one of the world’s most richly capitalised start-ups.
Founded in 2006 by Daniel Ek and Martin Lorentzon, the London and Stockholm-based company has grown since launch to encompass more than 68 million users and become one of the world’s leading music streaming services.
Its business model is based on royalty deals with rights holders, to which it pays around 70% of its revenue.
July’s turnover figures showed Spotify turned over €435m, having more than doubled its revenues in the space of 12 months.
The current $250m backing was led by Silicon Valley-based venture capital firm Technology Crossover Ventures and brings the young company’s value to around $4bn, according to the Wall Street Journal.
It follows a previous round of funding last year in which it raised $100m from a consortium of investors including Goldman Sachs and a further round in 2012 in which it raised another $100m from tech investors including Kleiner Perkins and Digital Sky Technologies.
The deal puts Spotify in a select category of start-ups that have managed to raise more than $400m in external financing, alongside daily deals site Living Social, social network Pinterest and online survey platform SurveyMonkey.
The investment will be used to expand Spotify’s presence in the US market, where it currently trails to competitor service Pandora, and to launch in new markets including Japan.
Spotify has declined to comment.