By Andy Gordon Most of you have heard of Spotify. It’s a late-stage startup. It’s been around since 2006 and is the most successful of the music-streaming companies.
I got to know it pretty well when we added it to the first-ever late-stage fund we offered to our premium subscribers back in 2014.
Spotify is led by the brilliant Daniel Ek, who became a multimillionaire at the tender age of 23 when he sold his online advertising company in his native Sweden.
Then he started Spotify.
The company shook up the music industry.
And now it plans to do the same thing to the investing space.
Let me explain.
On a Tear
Spotify has stepped up its game.
Revenue shot up 52% last year – to $3.45 billion.
Some 140 million people – 60 million of them paid – now use the service.
It hasn’t been easy.
Spotify worked and reworked its business model. It went from relying on unrealistic expectations of ad revenue and volume growth to figuring out how to convert free users to paid. And it negotiated more reasonable deals with record labels.
Two years ago, when it had only 20 million subscribers, Spotify was valued at $8.5 billion.
Its worth now is likely much higher, but it’s hard to know exactly without a “liquidity event.”
By the way, this is what all early investors hope for.
Only when their startups get bought out or go public can investors cash out and find out how much money they’ve made.
So last March, when Spotify announced its plans to list on the New York Stock Exchange (NYSE), it was great news… and not entirely unexpected.
Its growth had picked up. The public markets were also doing well.
The timing seemed right.
And the really exciting part?
This would not be your typical IPO.
Spotify wants to bypass underwriters and list directly on the NYSE.
Pretty big news. Bloomberg reported that Spotify “would be the biggest and the first [direct listing] for the New York Stock Exchange.”
Myomo Was the First
Well, the biggest, yes. But the first?
That honor goes to a small medtech startup called Myomo (NYSE: MYO). It makes incredibly sophisticated robotic braces that help people regain the use of their weakened or paralyzed arms and hands.
Its valuation was $35 million when it went from a crowdfunded raise under Regulation A+ rules to a direct listing on the NYSE.
Because Myomo was so small, nobody covered it except The Boston Globe. And that was only because Myomo hails from there.
Well, we covered it too. We thought it was groundbreaking. I called it at the time “the game-changing IPO you’ve never heard of.”
Investors went on an online investing platform to buy up to 2 million shares for $7.50 each.
It was done under the JOBS Act of 2012, which allowed Myomo to list as an “emerging growth company,” that is, a company with annual revenues of less than $1 billion.
Spotify doesn’t qualify. Its revenues are too big.
The SEC has to approve a proposed rule change at the NYSE for Spotify’s direct listing plan to go forward.
I used to think it was a no-brainer. Back in May, the …read more
Source:: Investment You
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