Success stories of startups and investors in them. Creandum and Spotify

Many investors made good money on Spotify's IPO on April 3, 2018, when the platform was valued at $29.5 billion.

#VENTURE

#INVEST

#ВЕНЧУР

8000%

total yield

Yield:

The total is invested:

Share in the company after the IPO:

$4,5 million

$370 million

Many investors made good money on Spotify's IPO on April 3, 2018, when the platform was valued at $29.5 billion. But of all the investors, the most interesting is the case of the small Swedish venture capital firm Creandum, which walked away with an 80-fold return on its investment. With an investment of $4.5 million for about 6% of the stock, Creandum's stake in Spotify was valued at $370 million at the time of exit.

INTRODUCTION

Creandum's recipe for success was betting on a difficult market, coupled with a long time building personal relationships with the startup team. Spotify didn't seem like the right bet when Creandum first looked at it in 2007 - most investors didn't want to touch that segment of the market. The music industry was risky, had very small margins, and opened up a whole world of legal headaches - at the time there was no easy or even completely legal way to make a business out of downloading music.

Nevertheless, after appreciating Spotify's product and team approach, Creandum led the first venture round. Before investing, Creandum and Spotify met regularly for talks and consultations for 18 months. These talks created a deep personal connection between Creandum and Spotify. In the end, it paid off - in the ten years since the investment, Spotify has grown from an unknown Swedish startup to the world's most popular music streaming service.

Difficult markets with huge barriers to entry can provide very large rewards. However, to benefit, investors need to do more than just throw money at a company-they need to invest time in building relationships and learning about the product so that when the success of the company becomes known, they can be at the forefront of