|Spotify Is Raising Millions in a Deal That Would Value It at $4 Billion |
By EVELYN M. RUSLI
New York Times
May 17, 2012, 12:35 p.m.
The mega funding rounds are back.
Spotify, the social music service, is in the process of raising hundreds of millions of dollars in a deal that would value the company at as much as $4 billion, according to people with knowledge of the matter, who spoke on the condition of anonymity because the talks were private.
Goldman Sachs is set to participate in the financing round, accounting for about $100 million. The company — which is still in discussion with several firms and may not close the round for many weeks — could ultimately raise about $220 million, two people said.
The lofty valuation for a service that expanded into the United States only last year underscores how fast the online music start-up, built on top of Facebook’s social network, has grown. Founded in Sweden in 2006, Spotify operated for years in Europe but it didn’t make its American debut until last year, after protracted negotiations with record labels. Since expanding its reach, Spotify’s business, which offers a free version and a premium subscription, has boomed.
It has roughly 19.9 monthly active users, according to AppData, a data service that tracks the popularity of Facebook applications.
In an interview last month with the Swedish newspaper Dagens Industri, Spotify’s chief executive, Daniel Ek, said that the company could record $889 million in revenue this year. Still, it will likely report a loss, as it spends money buildings its business. Last year, it booked a loss of roughly $60 million.
Last February, Spotify raised about $100 million, in a funding round led by Kleiner Perkins Caufield & Byers and DST Global, the Russian investment firm, in a deal that valued the company at $1 billion.