Epidemic SoundAn artist performs as he takes a selfie at Epidemic Sound's Music Summit 2019 in NYC
Much talked-about Swedish music company Epidemic Sound has just taken on a $450 million funding round – including money from investment giant Blackstone.
The investment sees Blackstone Growth (BXG) team up with EQT Growth in the round, which gives Epidemic Sound a $1.4 billion valuation.
Epidemic Sound’s existing investors before today included Creandum and EQT Mid-Market, as well as Atwater Capital.
Epidemic Sound, which was founded in 2009, said that the new investment would “be used to further accelerate [our] customer acquisition and invest even more aggressively in [our] core user experience”.
In addition, Epidemic said the money would be used to fuel the company’s international expansion, both in existing territories and new markets.
It will also be used, said Epidemic, “to develop and localize [our] digital offerings, continue investment in music, and unlock wider market potential”.
Rumors rumbled late last year that Epidemic Sound was looking to cement a $1bn-plus valuation – now achieved – and was considering an IPO to get there. The new investment round likely puts paid to that potential public listing… for the time being, at least.
Epidemic Sound’s business model has two tiers: (i) licensing its library of rights-cleared production music to broadcasters, airlines and hotels; and (ii) generating royalties from this music on streaming services such as Spotify and YouTube, as well as licensing it to platforms like Netflix and Twitch.
Epidemic fully acquires the rights to its composers’ music (both masters and publishing) via one-off upfront payments, but commits to paying through 50% of streaming revenue to the composers whose music it’s bought.
Epidemic Sound co-founder and CEO, Oscar Höglund, said of the new raise today (March 11): “We’re in the privileged position where our music is the soundtrack to our generation’s greatest achievement. We know what the internet sounds like and through data, we can see the trends emerging among content creators as they use our tracks to bring their stories to life.
“We’re thrilled to partner with EQT Growth and BXG to continue scaling how we use this data to grow our global network of creators and empower them all to thrive through new products, new music and new insights.”
“We’re thrilled to partner with EQT Growth and BXG to continue scaling how we use this data to grow our global network of creators and empower them all to thrive through new products, new music and new insights.”
Oscar Höglund, Epidemic Sound
Jan Zachrisson, Epidemic Sound co-founder, added: “The idea back in 2009 and the idea today are one and the same; we want to allow for anyone, anywhere in the world to get the music they need to soundtrack their story.
“We’re delighted to welcome our new partners on board as we take this to the next level and enter the next stage of our growth journey with our community of music creators and storytellers.”
Jon Korngold, Global Head of Blackstone Growth, said: “Epidemic Sound is a leading provider of restriction-free music and offers an essential resource to the millions of corporations and individuals that are generating more video content for customers, families, and friends alike.
“The company has established an incredible platform from which to expand globally, and we are privileged to have the opportunity to partner with Oscar and the management team to help unlock Epidemic Sound’s full potential in the years to come.”
“We are thrilled to partner with Epidemic Sound, a premier source for internet soundtracking, to contribute the network and resources of Blackstone as the company looks to accelerate growth and expand globally.”
Vini Letteri, Blackstone Growth
Vini Letteri, Senior Managing Director, Blackstone Growth said: “The creator economy has helped drive strong demand for music consumption that is restriction and hassle free across digital and social media.
“We are thrilled to partner with Epidemic Sound, a premier source for internet soundtracking, to contribute the network and resources of Blackstone as the company looks to accelerate growth and expand globally.”
Victor Englesson, Partner and Investment Advisor at EQT Partners, commented: “Epidemic Sound taps into numerous thematic macro trends, such as the democratization of how user-generated content is produced and consumed digitally, largely driven by the increased prevalence of video communication in our society and the growing online creator economy.
“Epidemic Sound will continue to cement its market leading position with a unique value proposition to storytellers and EQT is proud to have supported CEO Oscar Höglund and his team over the past three years. As the company now enters its next phase of growth, EQT is happy to renew its commitment to Epidemic Sound and join forces with Blackstone Growth to continue empowering storytellers and content creators around the world with high-quality, restriction-free music.”
SEB Corporate Finance and Goldman Sachs acted as financial advisers in the new $450 million raise, and White & Case acted as legal adviser.
A yearly financial report of Epidemic Sound’s parent, Epidemic Sound Holding AB, posted in Sweden during 2020, revealed the firm’s financial results for the calendar year of 2019.
In July 2019, Epidemic Sound raised $20 million at a $370 million valuation. Investors in that $20 million round included DS Asset Management from Korea and Skandinaviska Enskilda Banken AB (SEB), a Swedish financial group.
In addition to Creandum, Epidemic Sound’s financial backers over the years have included EQT – which bought a 40% stake in the firm 2017 – and Atwater Capital.Music Business Worldwide
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