Spotify set to snag $100 million in $3 billion valuation

Music streaming service Spotify is set to close a $100 million funding round that would value the company at $3 billion, believed to be a $1 billion drop from a much-rumoured valuation in May.

Spotify, which launched in October 2008, was founded by Swedish entrepreneurs Daniel Ek and Martin Lorentzon. It is now available in more than 15 countries including Australia.

Just last week, Spotify opened in Ireland and Luxembourg.

Reports suggest Spotify is on the cusp of closing a $100 million funding round in a deal that would value the UK-based company at slightly more than $3 billion.

This would be Spotify’s fifth major funding round. To date, Spotify has raised $188 million.

According to The New York Times, Coca-Cola is becoming a minority investor in Spotify, contributing about 10% of the $100 million, while Goldman Sachs is contributing half.

Another new investor, Fidelity Investments, is believed to be contributing about 15% of the round, while the remaining quarter is expected to come from Spotify’s existing investors.

Reports also suggest the involvement of Goldman Sachs and Fidelity Investments means Spotify could be preparing for an initial public offering further down the track.

Spotify is yet to comment on the reports.

While the company has 15 million users around the world, including four million paid subscribers, it is not yet profitable. Last year, it lost about $57 million in revenue, The NYT said.

There’s no word on whether any new funds would flow to the company’s Australian operations, which continue to go from strength to strength under the direction of Kate Vale.

Earlier this week, it was announced the 1D Music app, from British boy band One Direction, has launched globally on Spotify.

The app was launched on Spotify to coincide with the release of the band’s latest album.

According to Spotify, One Direction’s songs have already been streamed more than 100 million times.

“One Direction are one of the biggest bands in the world today, with a huge and dedicated fan base, so it’s no surprise that they have smashed the 100 million streams barrier on Spotify,” Will Hope, Spotify director of label relations, said in a statement.