Online music start-up aims to raise $50 million ahead of US IPO

Australian online music start-up Guvera is looking to tap investors in a $50 million private placement ahead of a planned public listing in the United States next year.

Guvera is an ad-sponsored service that gives members free access to music in exchange for drawing their attention to branded online content.

It was founded by former Swedish-Australian resident Claes Loberg, who has since moved to the US. Guvera chairman Darren Herft has an equal shareholding in the company alongside Loberg.

According to a report in The Australian, Guvera is looking to tap investors in a $50 million private placement ahead of a planned public listing in the US in mid 2013.

The company will also look to relocate its headquarters to the US as it attempts to capture more advertising dollars, but needs to strike more musical licensing deals in order to do so.

It also plans to appoint Philip Quartararo to run its US operations to speed up the listing. Quartararo was the co-founder and chief executive of Virgin Music America, and president of Warner Bros Records.

The company has already signed music deals with Universal Music and EMI, and is finalising a third deal with Sony Music.

According to Herft, Warner is “the last piece of the puzzle” for the company.

“Obviously, having Phil as a former president of the company in the States is a big helping hand for us,” he is quoted saying.

While Guvera plans to list on the NASDAQ, Herft insisted the company is “still 15 to 18 months away from that”.

Guvera is aiming to increase its equity capitalisation to $75 million in order to finalise licensing deals ahead of the listing, and make its service fully mobile for smartphones and tablets.

It has already raised about $25 million from its base of about 1000 smaller investors, primarily made up of accounting firms and other financial services businesses.

Guvera is among a new breed of online music services, such as US-based music-streaming start-up Spotify, which is in the process of launching in Australia.

Reports circulated earlier this month that Spotify is set to make a major announcement about its Australian launch, having already appointed its first local employee.

It has also partnered with Brisbane start-up We Are Hunted, which provides the top 99 tracks being talked about, blogged, shared and reviewed online each day.

Like Guvera, Spotify was founded by Swedish entrepreneurs – Daniel Ek and Martin Lorentzon – but is now based in the United Kingdom.

This article first appeared on StartupSmart.