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May 08, 2006
VC Backs Sharing Music Tastes
Last.fm, a London-based consumer Internet startup, has raised a first round from Index Ventures and its early business angel investors. No disclosure on the amount, but it was a typical-sized Series A round, the firm’s Austrian co-founder Martin Stiksel told the a:c euro.
Stiksel said that the deal was initiated by Index Ventures, and that the founders had not been actively looking for funding. The VC’s track record with Internet investments is one reason it was taken on as a backer.
We asked Index why it didn’t bring in any co-investors on the deal. Neil Rimer answered (via his assistant) that the round “wasn't big enough for more than one VC investor.”
Judging from the Ikea decor and the hands on office-moving efforts of Last.fm's founders (picture right), this is one of those low-cash-burn ventures.
Indeed, it was founded in 2003 and only raised seed capital last June, when several private investors took stakes. All three had success in the first wave of the consumer Internet and are now on their second or third ventures, namely Joi Ito, who is currently an excutive at Technorati and Six Apart, runs a VC firm, and prior to that built several Japanese Internet ventures; Reid Hoffman, a former PayPal exec and currently CEO of LinkedIn, and Stefan Glaenzer, who co-founded Ricardo.de (auction site) and is CEO of 20six Weblogs.
Last.fm’s business idea is to enable music promotion and to provide music title recommendations for its users by publishing other users’ tastes and listening habits.
It generates sales via advertising, premium services, and selling recommended titles in partnership with Amazon and other etailers.
Its software automatically tracks what people listen to on their audio players then makes sure that the title information is loaded back up into their profiles.
This information is then shared and can be used to create a set of tracks to listen to (the firm calls it creating your own radio station and as its name suggests is meant to disrupt traditional radio broadcasting), or to make new music purchases.
It is not primarily a music file sharing site, so it avoids the issues with copyrights that have hindered the growth other online music ventures. But it’s got a few competitors, mainly Pandora, if the discussion on various web business-oriented blogs is anything to go by. (Among users of Alexa Last.fm's more popular, according to Alexaholic)
Last.fm will use the funding to broaden its product offering, start translating the site into languages other than English, and to expand its business development efforts with the music industry, Stiksel told the a:c euro.
Posted on May 8, 2006 10:04 AM | Posted to Media | News And Updates | Online services | Venture Capital | Web 2.0 | Permalink
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