Spotify starts listing process with SEC filing

Nicole Tovstiga
01 March 2018

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VC-backed music streaming giant Spotify has begun the process to go public on the New York Stock Exchange after filing documents with the US Securities and Exchange Commission (SEC).

Rather than an IPO in the traditional sense, Spotify's public offering will take shape as a direct listing, which will let the market find a price. It cuts out the usual underwriting process through an investment bank, slashing banking fees.

Spotify's bid to go public is likely to be the biggest tech debut this year. The process will not raise any funds and instead will float existing shares with no new shares offered for the listing. There will not be a fixed number of shares and it will also not have a share opening price.

As one of the first major companies to use the direct listing process, Spotify cautioned in its filing that the volume and price of its ordinary shares may be more volatile than if the shares were initially listed via an underwritten IPO.

The company posted a turnover of €4.09bn in 2017, up from €2.95bn the year before and €1.9bn in 2015, according to the documents.

Spotify plans to list its shares on NYSE under the symbol SPOT.

Swedish funds Northzone Ventures, Creandum and the company's founders raised €15m for Stockholm-headquartered Spotify in a series-B financing round in October 2008. In a previous round of financing, approximately €5m was provided by the company's founders, according to Unquote Data.

Sean Parker and Founders Fund invested $11.6m in the third round of funding in February 2010, followed by Kleiner Perkins Caufield Byers, Accel Partners and Digital Sky Technologies investing $100m in the fourth round of funding in June 2011.

Goldman Sachs led a $100m round of growth capital funding in November 2012, alongside AFSquare, the Coca-Cola Company, Fidelity Ventures and Lakestar.

Technology Crossover Ventures provided a $250m round of growth capital funding in November 2013, with the funding designed to back the company's general growth plans.

Baillie Gifford, Lansdowne Partners and Rinkelberg Capital led a large syndicate of investors in a $526m round of growth capital funding in June 2015. Other investors participating in this latest round included Halcyon Asset Management, GSV Capital, DE Shaw & Co, Technology Crossover Ventures, Northzone, P Schoenfeld Asset Management, Senvest Capital and Discovery Capital Management. Goldman Sachs also participated in the round via its global private opportunity partners fund.

Almi Invest put SEK 1m towards a SEK 2.25m round of growth capital funding in December 2015, alongside other private investors.