Deezer raises €100M from Warner Music owner Len Blavatnik

Oct 6, 2012
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Deezer has finalized a round of €100 million by Russian-American billionaire Len Blavatnik via his investment fund Access Industries, with 75 million euros injected into the company, and 25 million euros to buy out previous shareholders. The announcement, originally reported by Le Figaro, indicates that while French investor Idinvest has maintained its stake in the company, Dotcorp Asset Management has been bought out; Orange previously had an 11% stake in the company, as well, and will reportedly see it’s stake diluted with the new investment. News broke back in February that Deezer would be looking to raise this enormous round, following in the footsteps of its chief competitor Spotify, who raised the same amount in June of 2011. This new round of funding represents the biggest fundraising by a French internet startup, and a monumental move for Deezer.

Deezer, despite its 2 million subscribers and strength in Europe, has long lived in the shadow of Spotify, who advanced quickly and powerfully in the US market when they integrated fully with Facebook when Facebook launched its ticker feed However, with Spotify’s recent financial reporting of a $53 Million annual loss despite $200+ Million in revenue, this announcement for Deezer could not come at a better time.

Getting in bed with Warner Music

Deezer, who has grown 30% in the past year, might also be taking advantage of their new billionaire investors other ‘investments,’ like Warner Music, which he bought last year for $1.3 Billion. The new investment should not only help Deezer in their internationalization, but it puts Deezer somewhere that Spotify has never been able to go – in the hands of the Music Industry (UPDATE: this comment originally was meant to make reference to Spotify’s unfavorable contracts with the music industry which make it difficult for Spotify to be profitale. It has been pointed out that Spotify is partly owned by various major music labels, which would be put them, well, at least in the fingertips of the music industry.). Spotify has long since tried to work around the music industry, with Spotify investor Sean Parker‘s reputation having carried over from his days co-founding Napster.

While LinkedIn’s success has often cast a shadow over Viadeo’s lesser success, it seems that Spotify’s financial trouble’s have shielded, rather than cast a shadow over Deezer, who continues to grow year over year in revenue and subscribers.