The coming Marketing Battle
Steve’s breakdown: Getting in the middle Spotify and Apple is a great place to be right now. And that’s especially true now that Spotify closed $526 million in equity cash-raising.
Plus, if they’re going to be playing with the big guys, they should not be doing the marketing in-house!
The nine-year old Swedish company closed on Tuesday a $526 million equity cash-raising — money that will help fund what promises to be a costly marketing battle with its deep-pocketed US rival.
At the same time, Spotify, now worth $8.5 billion based on the equity stake sold to the investors, according to a person familiar with the matter, said it had 75 million users — including 20 million who pay a $9.99 a month subscription fee.
Apple unveiled on Monday a $9.99 a month subscription service and is expected to unleash a massive marketing campaign went it kicks off later this month.
The cash raised by Spotify could also be used to help pay for an aggressive geographic expansion plan and a move into other forms of content — like video and podcasts.
Spotify’s latest investors include a number of investment funds in Europe and the US, like Stockholm-based telecom giant TeliaSonera, British asset managers Baillie Gifford, Landsdowne Partners and Rinkelberg Capital and Canadian hedge funds Senvest Capital and Discovery Capital Management, Dow Jones reported, citing a person familiar with the matter.
US investors in the round include Halcyon Asset Management, GSV Capital, D.E. Shaw & Co., Technology Crossover Ventures, Northzone and P. Schoenfeld Asset Management, Dow Jones reported.
Goldman Sachs, which Spotify hired to raise the new funding, also invested through its Global Private Opportunity Partners fund.
Abu Dhabi’s sovereign-wealth fund also agreed to invest in the round, a person familiar with the matter said in April.
The $8.5 billion valuation for Spotify is more than double the $3.6 billion valuation for rival Pandora.