The Wall Street Journal reports that Spotify “has expressed a desire” to raise $500-million in private investment, and is working with Goldman Sachs to achieve it. The WSJ’s sources say that Spotify valuation could be above $7-billion with the new investment.
Publicly traded Pandora (P) shows a market capitalization of $3.5-billion today. Pandora’s mercurial stock has produced a valuation nearly twice as high in the past.
Spotify has benefitted from seven rounds of funding to date, according to Crunchbase, totalling $538-million. The reported capital goal would be the largest single round, if fully sold, and would bring total funding over one-billion dollars. The most recent previous injection of private capital was in November, 2013, for $250-million, by Technology Crossover Ventures. Other capital investors make a high-profile roll call in the venture community: Sean Parker, Goldman Sachs, Fidelity Ventures, Kleiner Perkins Caufield & Byers, Founders Fund, and others.
Non-stop speculation of an IPO has fueled business coverage of Spotify, and a large new round of private financing would put that possibility on the back burner for some time.
In the meantime, Jason Calacanis (keynote speaker at RAIN Summit West 2014), published an analysis of Facebook in which he predicted a “90% chance” that the leading social media company would acquire Spotify. The Calacanis prediction was unrelated to Spotify’s potential fund-raising, but even considering a potential $7-billion valuation, Facebook might regard that buying price quite reasonable in context of Apple’s May 2014 takeover of Beats Electronics for $5-billion. Spotify is years ahead of Beats Music in audience, brand recognition, global scope, and revenue.