icon_4Ps_people icon_4Ps_potential icon_4Ps_predictability icon_4Ps_product icon_theme_cloudbigdata icon_theme_education icon_theme_marketplaces icon_theme_socialmobile icon_theme_sustainability

GSV Capital is the first publicly traded security giving growth equity investors access to the world's most dynamic, VC-backed private companies.

More about GSV Capital
NASDAQ: GSVC
Back to portfolio
Top 10

Why We Like

$16.2 million NAV|7.3% of GSVC

Founded

2006

Capital Raised

$1.56 billion

Investors

GSV Capital along with Accel Partners, Founders Fund, Goldman Sachs, KPCB, and DST Global (Yuri Milner), among others

GSV Investment Theme

  • Cloud/Big Data
  • Marketplaces
  • Sustainability
  • Education

Overview

Spotify is an online music provider that offers digitally restricted streaming of selected songs from a wide range of artists and music genres, including both major and independent labels. Spotify is currently available both in the United States and over 50 other countries around the globe. Spotify uniquely allows users to precisely choose the artists, songs, and genres they wish to appear on their playlist, in direct contrast with Pandora that uses an algorithm to select similar music.

4Ps
Why We Like It: The Four Ps

Why We Like Spotify

Recently consumer preferences have shifted from owning music to “renting” it, allowing listeners to access their favorite songs seamlessly from their tablet, smartphone, and computer. We believe this trend will only continue to expand in the future as the world undergoes this shift.

People

Daniel Ek, Founder and CEO, has been a lifelong entrepreneur, founding his first company at age 14. Previously he was CTO at Jajja Communications, CTO at Stardoll, and CEO of uTorrent, the world’s most popular BitTorrent client. Since its emergence as a leading music platform, Spotify has been able to recruit a highly experienced executive team and practiced engineers.

Daniel Ek
Founder/CEO
Joe Smith
President
Steve Smith
Vice-President

Key Board Members

Sean Parker, Chi-Hua Chien, Klaus Hommels

Product

While the online music space is packed with competition, Spotify provides a different product compared to any of its competitors. By creating a lightweight software application, users are able to instantly access and listen to specific tracks with no buffering delay. Furthermore, their product is linked to Facebook, allowing users to share tracks with their friends in real time. Users can register for free, advertising-supported accounts, or paid subscriptions without ads that include extra features.

Potential

Portable music has become a staple to the everyday lives of people around the world. Spotify has gained an enormous market share in the digital music space and already has more than 60 million monthly active users. We see tremendous potential growth both in the U.S. and abroad as access to technology continues to improve and users seek additional use purposes for their computers, smartphones, and tablets.

Megatrends

Internet; Globalization; Convergence; Consolidation

How Big Can This Be?

Portable music has become a facet of the daily lives of people throughout the developed world. Spotify has already begun to reinvent the existing market and disrupt iTunes, the market leader, as consumers undergo the behavioral shift in preferences from music ownership to music rentals.

Predictability

Spotify has a rapidly expanding user base and is continually building upon its current universe of tracks to accommodate the changing preferences of consumers. In the foreseeable future, Spotify will remain the market leader because of its current contracts and expansive library.

Risks

The largest area of concern for Spotify is the legal and political climate surrounding record rights. Currently Spotify has contracts with essentially every major record label, although it still remains a point of future vulnerability.

GSVC percentage figures are based upon the fair value of each holding as of the quarter ended September 30, 2016, or the cost basis of the holding (exclusive of transaction costs) if the investment closed subsequent to September 30, 2016. In either case, these values are divided by the fair value of total portfolio investments of GSV Capital as of September 30, 2016.

GSV stands forGlobal Silicon Valley
Learn more at GSV.com