Digital

Spotify investor admits IPO on his consideration list

By | Published on Friday 14 December 2012

Spotify

A key Spotify investor earlier this week indicating his hope that the streaming music service will eventually move to an IPO, enabling existing equity holders to sell their shares on one stock exchange or another and to cash-in big time. Par-Jorgen Parson of Northzone told Reuters: “We, meaning Northzone, would assume the most logical way of building for the long term would be to IPO the company in a few years time or so”.

That viewpoint conflicts, though, with Spotify boss Daniel Ek, who has said in the past that he doesn’t see a flotation as the sensible route for his business to go. Given the flack that US-based rival Pandora has been getting of late since it became a publicly listed company, there’s a lot of logic to Ek’s viewpoint.

Though the streaming service chief also possibly plays down the possibility of an IPO in a bid to convince artists and rights owners of his long-term commitment to the streaming set-up, ie he doesn’t plan to cash-in and bail-out leaving an over-valued unsustainable business behind him, as can happen in the digital space.

Some of Ek’s financial backers, though, won’t be in it for the long-term, especially while profitability year-on-year seems some way off, and may put some pressure on the company to seek a public share sale or major acquisition, especially if City interest in tech start-ups (which has lessened of late following a number of lack-lustre IPOs, most notably Facebook) heightens again at some point.

That said, Parson was keen to stress that Ek was leading on this, adding: “At the end of the day, it is primarily up to the founders to decide how to best build the company for the long haul”.



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