Spotify AB, a Swedish company, has successfully secured about USD 250 million in new financing. This would put the value of the music-streaming company higher than USD 4 billion, according to sources whom are familiar with the deal. With this in mind, Spotify's valuation is now almost shoulder to shoulder with Pandora, which went public in 2011 and is currently valued at USD 5.7 billion.
The round of funding was led by Silicon Valley firm Technology Crossover Ventures and will definitely help inject much needed funds to Spotify's global plans of expansion. Technology Crossover Ventures, in fact value adds Spotify as it is familiar with the content licensing business. With TVC purchasing $200 million in convertible bonds from Netflix Inc about two years ago, when the video company was not in good shape which now, has more than quadrupled thanks to the deal.
Spotify competes with US-based music services such as Pandora Media Inc as well as bigger content providers such as Apple Inc. Spotify's revenue model is mostly from premium subscriptions with more than 6 million subscribers paying up to USD 10 a month for its service aside from its advertisers. Its current active free user database is now at a 24 million plus range.
Other than that, Spotify's losses have began to show as it spends heavily into its expansion projects into new markets from servicing 17 countries last year, to 32 countries this year on top of deals with 25 telecom operators world wide.
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