According to a source knowledgable on the matter, music streaming service Spotify is on the process of raising hundreds of millions of dollars, with a potential valuation of $4 billion. According to the New York Times, Spotify may ultimately garner roughly $220 million, with possibly $100 million coming from Goldman Sachs.
Spotify, based in Sweden, was launched in the U.S. last year, and currently has about 19.9 million monthly users subscribing to its free and pay services. Spotify brought in $250 million in revenue in 2011, up 160%, though saw losses of around $59 million. As of April, the platform brought in $887 million, though in an interview, CEO Daniel Ek stated, “The question of when we’ll show a profit actually feels irrelevant. Our focus is entirely on growth. It is priority one, two, three, four and five.” Spotify is presently more concerned with grabbing more users around the world, in the setting up of a legitimate subscription service.
Ek seeks to build Spotify into a platform that will stand the test of time, and states, “the stock exchange is not an option for us” – still, the stock market might be the only exit that investors will eventually seek. Ek goes on to say, “At those levels ($4 billion valuation), we would definitely be interested in talking. We have no need of more capital in the current situation in order to operate the business plan we have. But I have learned to always take the money when you do not need the money. If an investor can add strategic value and the valuation is good, we are interested.” It would appear that the results so far of Spotify’s focus on growth don’t have investors worried.