2021 music tech startup deals, exits, and IPOs

By: Cherie Hu

Published: 2021-05-13

We’re excited to share our next database: A central, curated and searchable hub for tracking music/audio tech startup funding rounds, investors, IPOs and SPACs throughout 2021.

Every year, we keep track of global startup investments as one our primary signals for the emerging growth opportunities in music and culture. Previously for members, we published this in the form of a curated database of startup funding rounds, with biannual reports on key trends surfacing from our data (e.g. revisit our reports from February 2020 and January 2021).

The database we’re sharing with you today is the most comprehensive, wide-reaching version of this research that we’ve published to date — tracking not only private, venture-capital investments in music/tech companies, but also upcoming media- and entertainment-related IPOs and SPACs, as well as additional startup funding rounds in podcasting, gaming, social media and other adjacent verticals.

The base will be continually updated on a weekly basis through the end of the year, at which point we’ll publish our annual, members-only recap of music/tech investment activity.

You can either dive straight into the base yourself below, or continue reading on for some more context around how we curate the database, plus key initial takeaways from investment activity so far this year.

Database walkthrough

There are seven different tabs for you to peruse. The first five focus on private markets, while the last two focus on public markets.

1. Music/Audio Startup Funding Rounds

This is the primary tab to follow if you’re interested in venture-capital and private-equity investments in music and audio startups. We have nearly 50 startups on this list so far, based in 31 cities and 13 countries around the world. Importantly, we’re including both music-focused startups and non-music audio startups (e.g. for podcasts, audiobooks and social audio) in this tab.

2. Music/Audio Startup Investors

This tab, which is linked with the “Music/Audio Startup Funding Rounds” tab, features publicly named investors in music- and audio-tech companies. Our list includes over 100 different investing organizations (venture-capital firms, syndicates, investment banks, corporate VC arms, etc.) from 12 countries around the world, in addition to nearly 40 individual angel investors. This is likely not a 100% exhaustive list, but it is nonetheless a clean, highly curated and comprehensive snapshot of the music/tech investor landscape.

3. Music/Audio Startup Exits

This tab focuses on exits and M&A deals that have taken place so far in 2021. Again, this includes both music-focused startups and those focused on non-music audio offerings, such as podcasts.

4. Artists on Cap Tables

This tab features a curated list of artists and music celebrities who have publicly announced investments in tech startups in 2021. We have over 27 artist-investors on our list — many of whom are investing through dedicated VC firms, such as Jay-Z’s Marcy Venture Partners, The Chainsmokers’ Mantis and Paul McCartney’s MPL Ventures.

5. Adjacent Rounds to Know

This tab features venture-capital and private-equity investments in startups that are not related to music, but could have a significant impact on the entertainment and digital-media landscape at large. For the sake of scope, we focus mostly on highlighting startups in gaming, social media, ecommerce, crypto, avatars and fan engagement.

6.  Music/Audio/Entertainment SPACS

This tab lists SPACs — or Special Purpose Acquisition Companies — that focus on music, media or entertainment companies and plan to IPO and/or acquire such companies in 2021, if they haven’t already. There are six SPACS on our list so far, many of which have already announced plans to acquire specific music companies (e.g. Reservoir Media x Roth CH Acquisition Co. II, and Anghami x Vistas Media Acquisition Company Inc.).

7. Music/Audio/Entertainment IPOs (non-SPACS)

Last but not least, this tab includes any music or entertainment companies that plan on going public this year, and are not doing so via SPAC. There are eight companies on this list, two of which have already gone public(Roblox and Endeavor).

Data disclaimers

What is a “music startup”? We use the same definition of a “music startup” that we put forth in our 2020 music/tech investment report — namely, any software or hardware company that meets one of the following criteria:

How do we source investment data? We track and aggregate investment announcements from across multiple sources, including media companies like TechCrunch, Bloomberg, The Verge, Billboard and Variety; automated databases like Crunchbase; and direct fact-checking with startup founders and investors.

What are the data limitations? We are building out this database primarily based on publicly available data, which means we will inevitably leave out certain startups who choose not to bring their funding announcements to the press. For now, our list also has a strong Western (i.e. U.S./E.U.) bias, which may be due to the online publications we’re referencing in our data collection. That said, we believe this bias also exists to a certain extent in the music/tech investment landscape at large.

As we previously covered, 2020 marked a six-year low for annual music-tech funding, reaching a total of only $700 million. One silver lining so far this year is that music and audio tech funding is already on track to outpace 2020 levels by at least 4x, as investors gradually develop a clearer sense of when live music will return and what specific music-industry needs will stay relevant in the long term, especially around fan engagement and creative tools.

Startup funding

The top three startup categories by number of deals so far this year are livestreaming, fan/community engagement platforms and music creation/production tools. This is mostly unsurprising; more consolidation in the livestreaming sector is expected as live music comes back, while the pandemic has revealed the importance of developing a robust direct-to-fan tech stack for artists.

The top music/audio tech fundraises of 2021 so far by round size cover a pretty wide range of applications, from B2B music marketplaces to more consumer-facing social and gaming platforms:

Importantly, while all of these top companies directly involve the music industry as investors and/or customers, most of their core products are not limited solely to music, with the exception of Epidemic Sound.

Startup exits

Unsurprisingly, livestreaming is driving not only the highest number of music/tech funding deals, but also the highest number of exits. In 2021 so far, we’ve seen Live Nation acquire Veeps, Sofar Sounds buy Seated, Spotify buy Betty Labs and Songtradr buy the livestream-safe music startup Pretzel.

Outside of music, though, there’s even faster consolidation happening in the podcast tech sector, across the entire funnel of distribution, advertising and direct-to-fan monetization. Aside from Spotify, the most aggressive buyer in the podcast market is Libsyn, which has acquired Auxbus, Advertisecast and Glow so far this year. (Revisit our coverage of the future of social audio to dive deeper into the implications of this consolidation.)

Investors

Equally as interesting as which startups are getting funded this year is who exactly is funding them.

There are four preliminary trends to highlight on the investor front for now:

1. Artist-investors are disproportionately likely to back health, crypto and fintech startups — not music or entertainment startups.

This is a smart move on the artists’ side, as they should seek to diversify their investments instead of limiting themselves to entertainment. It also perhaps signals that artists see larger growth opportunities in areas like health and fintech than in music, in terms of market size and potential customer reach.

The fact that several crypto startups, including OpenSea and Bitski, have artists on their cap tables implies that musicians and celebrities will play a significant role in wider consumer adoption of crypto in the long run. In addition, the trend of artists backing health and fitness startups reinforces the role that modern artists play as lifestyle influencers, not just musicians.

2. Specialist/vertical VC firms and corporate VC arms are on the rise in music and audio.

Our investor list features a larger number of specialist/vertical VC firms and corporate VC arms than in previous years.

The suite of vertical-focused VCs investing in music and tech includes not only music-focused firms like Raised In Space and Matt Pincus’ MUSIC, but also general entertainment-focused firms like LightShed Ventures, Powerhouse Capital and Advancit Capital; sports- and gaming-focused firms like Will Ventures and Griffin Gaming Partners; and diversity-focused firms like Gaingels.

Corporate VC arms of both big-tech conglomerates and major entertainment companies are also ramping up their startup investments in and around music, including but not limited to:

Interestingly, a handful of investors in podcast tech companies specialize not in specific company verticals, but rather in certain geographic regions — e.g. Hyde Park Venture Partners and Poplar Ventures (both focus on startups based in the mid-continent U.S.) and Elevate Ventures (focus on startups in Indiana).

3. Several major investment banks and private-equity firms are backing creative tools for artists.

From Goldman Sachs and Splice, to Francisco Partners and Native Instruments/iZotope, to Blackstone Group and Epidemic Sound, legacy investment banks and PE firms are also pouring tens of millions of dollars into creative tools for the music industry, alongside smaller, more niche VC firms.

This suggests that as music streaming and consumption become more saturated and moves largely to public markets, B2B music tools and “artist services” represent the next growth frontier for private investors — particularly tools that can help artists make their best work, and get it into the hands of the right people.