Russian investment firm DST, famous for its big stakes in Facebook, Zynga and Groupon, is about to lead a financing round of $100 million or more into Spotify, the very popular European music streaming app, TechCrunch says.
This is smart. Spotify has a proven revenue model and it’s only going to get better. What it needs to come into its own is scale, ie being in the US as well as Europe. But to do that they need to entice record labels with big upfront cash payments. We suggested an IPO, old-school style, as a way to raise the cash, but going with the deep-pocketed and audacious Russian fund is an option as well.
For DST the deal makes sense as well. They like to invest in companies that are already big and have a big business already, but can yet get much, much bigger. Spotify fits the bill perfectly. And the company is still led by its founder CEO.
Spotify’s current investors include VC firm Founders Fund, which is also an investor in Facebook, and Facebook’s founding president Sean Parker sits on Spotify’s board, so it’s not hard to imagine where the connection comes from.