Soundtrack Your Brand (SYB), which provides a background music streaming service for businesses, said on Friday it had raised $22 million (€20.6 million) in a funding round led by Nordic venture capital fund Industrifonden and UK's Balderton Capital.
The company was co-founded by Spotify in 2013 and provides tailor-made music playlists for customers such as McDonald's and Swiss watch brand Tag Heuer. It said the funding would help with its plans to expand globally.
Telia, Northzone, Creandum and H&M's family vehicle HMP, which have already invested in SYB, also participated in the latest financing round. Spotify, the largest external owner with about 15 per cent of the share capital, did not.
An SYB spokesman declined to comment on the amount of shares issued or on the valuation of the company.
Tech start-up
The Swedish tech start-up's sales are growing by between 300 and 400 per cent a year, from the 10 million crowns (€1.03 million) achieved in 2015, chief executive and co-founder Ola Sars said. He also said the firm's market share in the Nordic countries was around 30 per cent.
“Outside of there we’re not even on the map since we just started, but our plan is for global market leadership within five years,” he said.
SYB said its main competitive advantage was much lower distribution costs than competitors due to its product being digital, which makes it possible to target more customers. SYB says most background music is distributed via CDs, satellite feeds and USB sticks.
The firm estimates the global market for background music, which is very fragmented, at about $2-4 billion annually in terms of sales, with Texas-based Mood Media the current market leader.
Music streaming
SYB competes directly with Mood Media and several local players in its markets. It also competes indirectly with consumer music streaming services such as Apple Music and Spotify.
It targets small businesses and large chains with the pitch that music can keep customers in-store longer and boost sales. It has received about $40 million in funding to date.
SYB-backer Spotify has made big losses since it was created a decade ago, but a board member told Reuters in December it could start to become profitable as early as this year.
Based on a funding round in 2015, Spotify – widely seen as a prime candidate to go public on the Nasdaq – had a value of more than $8 billion.
It reported an operating loss of €184.5 million in 2015, up from €165.1 million in 2014.
