Music streaming service Spotify has finalized a new $526 million round of funding from a variety of investors who are betting it can beat off a budding threat from Apple and continue to dominate the segment.
This more than $500 million round of funding valued the company at $8.53 billion, according to a knowledgeable source. The funding round officially closed on Tuesday, June 9th.
More on Spotify funding round, dealing with competition from Apple Music
Spotify will spend the money on growth and expansion, as well as developing new forms of content. The music streamer will have to deal with a growing set of challengers including the brand new Apple Music, a subscription-based streaming-music service and a 24-hour global Internet radio station launched on Monday by the iPhone maker.
Of note, the WSJ source highlights that investors in Spotify’s new funding round include UK asset managers Baillie Gifford, Landsdowne Partners and Rinkelberg Capital; Canadian hedge funds Senvest Capital and Discovery Capital Management.
Euro Telecom operator TeliaSonera AB also invested $115 million, and also released a statement saying that the firmswould work together in media distribution, customer insights, data analytics and advertising.
American investors included Halcyon Asset Management, GSV Capital, D.E. Shaw & Co., Technology Crossover Ventures, Northzone and P. Schoenfeld Asset Management. Goldman Sachs, who managed the new funding, also put in cash via its Global Private Opportunity Partners fund.
At $8.5 billion, analysts note Spotify now has a value more than double that of Pandora Media (current market cap around $3.5 billion). Keep in mind that both firms operate at a loss right now, as they share most of their revenue with music label partners. Spotify had a value of just over $5 billion last September,
It’s likely that a good chunk of the new funding may be used to boost Spotify’s move into new forms of media. Along those lines, the company recently announced a plan to add videos and podcasts from major partners such as ESPN, NBC, Conde Nast and Comedy Central to its line up.
Spotify CEO deleted tweet
Also of interest, according to multiple media sources, Spotify chief Daniel Ek tweeted “Oh ok” after the announcement of the launch of Apple Music on Monday, then deleted the tweet. Of note, Apple’s streaming-music subscription service is priced close to Spotify’s premium ad-free service at $9.99 a month (with a three-month trial period).