Fundraising secured: $11.5m
Grants Received: £104k
Stage: Growth
Overview of the Business
Mixcloud is a British online music streaming service that allows for the listening and distribution of radio shows, DJ mixes and podcasts, which are crowdsourced by its users. In April 2018, Mixcloud announced that it raised $11.5 million from WndrCo LLC, a holding company focused on media-focused technology, the financing allowed for Mixcloud’s global expansion.
Co-founder Nikhil Shah relays in his ‘Invest in Creative’ interview, that when they first started out ‘really the key problem that we were solving at the time was that there wasn’t a trustworthy, reliable platform for a DJ to put a show on’.
Legal considerations: initially there were complex legal obstacles to navigate; they put a lot of work into getting all the deals in place with different record labels and publishers, so that they were providing a safe space for DJs and radio stations to host content legally, whilst connecting them to an audience and helping them to build a community.
Their Growth Journey
Business model evolution: Nikhil shares that their business model and proposition has evolved, at the start they were focused on both creators and listeners, to where they are now, which is focusing on enabling creators to build deep, meaningful relationships with their communities. Whilst many social media platforms help to foster meaningful engagement between listeners and creators, they often don’t allow for deeper connections, specifically those that allow for monetisation, which is where they see their sweet spot. Nikhil sees the monetisation of fan/artist relationships as ‘a big missing piece of the digital music space’.
What first attracted investors
Bootstrapping and grant funding: they bootstrapped the company for the first 7-8 years. Around this time fundraising was proving especially difficult across the sector, on account of the financial crisis; from this point, they were then able to secure essential government grant support. Poignantly, Nikhil shares as part of his interview: ‘we’re actually a good a good example of government grants support turning into a successful business’.
After bootstrapping for a number of years, they built a business model that was robust enough to allow for organic scaling. After around 8 years and a significant shift in the perception of the digital music space, they raised a series A round of around $11.5 million from WndrCo, from their current lead investors and a syndicate of industry angels and leaders.
Growth in the sector
A shift in perception: Nikhil discusses as part of his interview that when they first tried to raise investment, around 10+ years ago, there just wasn’t the appetite from the investment community. He hopes that this has changed for the next generation of creative businesses; as he puts it: ‘if we had the backers then we would have been able to move quicker’. He notes that there’s definitely more advice and understanding around what it means to be an angel, which he hopes leads to more people backing the entrepreneurs of the future in the creative industries.
