Soundtrack Your Brand (SYB), which provides a background music streaming service for businesses, said on Friday it had raised $22 million (roughly Rs. 148 crores) in a funding round led by Nordic venture capital fund Industrifonden and UK's Balderton Capital.
The company was co-founded by Spotify in 2013 and provides tailor-made music playlists for customers such as McDonald's and Swiss watch brand Tag Heuer. It said the funding would help with its plans to expand globally.
Telia, Northzone, Creandum and H&M's family vehicle HMP, which have already invested in SYB, also participated in the latest financing round. Spotify, the largest external owner with around 15 percent of the share capital, did not.
An SYB spokesman declined to comment on the amount of shares issued, or on the valuation of the company.
The Swedish tech startup's sales are currently growing by between 300 and 400 percent a year, from the SEK 10 million ($1.1 million) achieved in 2015, CEO and co-founder Ola Sars said. He also said the firm's market share in the Nordic countries was around 30 percent.
"Outside of there we're not even on the map since we just started, but our plan is for global market leadership within five years," he told Reuters.
SYB said its main competitive advantage was much lower distribution costs than competitors due to its product being digital, which makes it possible to target more customers. SYB says most background music is distributed via CDs, satellite feeds and USB sticks.
The firm estimates the global market for background music, which is very fragmented, at around $2-4 billion annually in terms of sales, with Texas-based Mood Media the current market leader.
It targets small businesses and large chains with the pitch that music can keep customers in-store longer and boost sales. It has received around $40 million (roughly Rs. 269 crores) in funding to date.
SYB backer Spotify has made big losses since it was created a decade ago, but a board member told Reuters in December it could start to become profitable as early as this year.
Based on a funding round in 2015, Spotify - widely seen as a prime candidate to go public on the Nasdaq - had a value of over $8 billion.
It reported an operating loss of EUR 184.5 million ($196.1 million) in 2015, up from 165.1 million in 2014.
© Thomson Reuters 2017