Company executives didn’t ring the opening bell. On the trading floor, they shunned the usual interviews. But despite the lack of fanfare, this highly-anticipated flotation, which valued the company at an unprecedented $26 billion, was a milestone for European venture capital.
A 23-year old Daniel Ek established Spotify in 2006 with co-founder Martin Lorentzon, a fellow Swedish serial entrepreneur who had previously bought Ek’s adtech company, Advertigo. Spotify’s entry into the music industry came at a time when digital piracy was rife and traditional labels were struggling to maintain sales. By creating a platform for streaming, it was able to reach consumers and monetise music in a fresh way. But they didn’t do it alone. Over the company’s 12-year history, it has benefited from funding and expertise from European VCs – and Invest Europe members – including Swedish firms Northzone and Creandum, Wellington Partners in Germany and Switzerland’s Lakestar.
Northzone’s General Partner, Pär-Jörgen Pärson knew something special was going on at Spotify’s Stockholm office in 2007 because of the buzz their slick new app was creating. High-profile names following the company’s progress included Sean Parker, the Napster founder who went on to become Facebook’s first president. In a Fortune magazine interview shortly before the listing, Pärson explained why he was initially drawn to Spotify. “They had a level of ambition that I hadn’t seen before in Sweden and were very aware of what they were building,” he said. “They weren’t settling for the good enough; they were going for the best.” On Creandum’s website, General Partner Fredrik Cassel reflects on why he was attracted to Spotify around the same time: “The pitch already from the start was, ‘This needs to be better than piracy’, and of course anyone who tried it knew that it was. It was just better.”