Armed with $22 million in fresh funding, Swedish background-music streamer Soundtrack Your Brand is cutting its musical ties to Spotify Ltd. and embarking on a quest for international growth.
The startup that's signed deals to stream background music to LVMH's TAG Heuer watch stores and McDonald's restaurants said Friday that investors including Balderton Capital and Industrifonden will fund what chief executive officer and co-founder Ola Sars calls an "aggressive expansion plan." The strategy includes building its own library of music to offer to hotels and retailers.
"This is the end of the first chapter and the beginning of something new," Sars, who helped create Beats Music, said in an interview at the Stockholm-based company's headquarters. "We have proven that the model works in the Nordics. That's enough for taking the next step."
Soundtrack is pushing into global markets to attract retailers with hundreds or even thousands of locations to its cloud-based music as it chases the market leader, Toronto-listed Mood Media Corp.
Spotify, an early Soundtrack investor, used a similar formula to wean consumers away from pirated lists and illegal streaming. Soundtrack used Spotify's catalog for its first 18 months of operations but is now building a library of its own music to pursue a more independent path.
While the company first branded as Spotify for Business still counts the global music streaming leader as its largest external shareholder, Spotify didn't take part in this financing round. After the new funding, Spotify will hold about 15 percent of Soundtrack. Having its own library will strengthen Soundtrack's independence and let it negotiate its own terms with rights holders.
"We tried it with Spotify and proved that the model works," said Andreas Liffgarden, co-founder and chairman of Soundtrack, and the former global head of business development at Spotify. "Now the teenager has grown up and it's time to move out."
Previous investors, including Telia AB, Northzone and Creandum also took part in the latest financing round.