Music streaming service Spotify has hired Goldman Sachs for a new round of financing in an effort to raise about $500 million and boost the startup’s value to as much as $8 billion, according to anonymous sources.
The decision to raise further cash privately is likely to delay the Swedish company’s much-touted public listing that is widely expected to occur before the end of 2015, the report said.
Among Spotify’s investors are Sean Parker, the founder of Napster, and Technology Crossover Ventures, the Silicon Valley investment firm that led its most recent fundraising at the end of 2013, when it secured $250 million, the Times said.
The music company arranged a $200 million line of credit last March, sparking industry speculation that it was moving closer to an initial public offering in the US. The startup has repeatedly refused to comment on any IPO preparations.
In the U.S., venture capital fundraising reached a seven-year high of over $30 billion in 2014, according to the National Venture Capital Association, a report said.
Spotify’s has continued to grow recently, with the company adding 2.5 million subscribers and 10 million users to its free tier in November and December.
Spotify operates a paid subscription service alongside a free, advertising supported, tier. It now has 15 million paying subscribers alongside 60 million people using the free service.
The growth has come in spite of a high-profile conflict with Taylor Swift, who withdrew her albums from Spotify after the company refused to pull her songs from the free tier. Swift argued that the free tier did not value her work, the Financial Times said.
However, Spotify has claimed that the free tier is the best way to monetize its users because it can convert some of them into paying customers.
The company’s growth comes ahead of what may be a serious challenge from Apple’s new streaming service. The world’s largest seller of music has been integrating the service it received with its $3 billion acquisition of Beats and will include it as part of an upgrade to its iOS operating system, the Times said, adding that the upgrade will potentially put the service on hundreds of millions of Apple devices.