News - 22/02/2016

8Tracks and Chew: two music startups successfully navigating equity crowdfunding

8Tracks and Chew: two music startups successfully navigating equity crowdfunding

Chew, a live streaming community of DJs that describes itself as “Twitch for DJs” and 8Tracks, a platform for online mixtapes, are showing remarkable success in their equity crowdfunding efforts. 

London-based Chew has chosen the Seedrs platform and has raised £151,451, offering 10% equity with a £1.35 million pre-money valuation. Chew aims to be the one place that brings together different communities of passionate amateur DJs, allowing them to learn from one another and also to discover the next big thing. 

8Tracks on the other hand has chosen Seedinvest and taken a different approach to equity crowdfunding by “testing the waters”. Seedinvest provides a function which enables potential investors to “indicate interest in 8tracks”, and people have indicated said interest to the tune of $26 million. 

8Tracks’ money is all ‘virtual’ since none of the people who fill in the form are actually committed to investing: this means that anyone could go on the platform and pledge to put in $100k. In addition, the company has not unveiled any detailed plans on how the investment round would work, and usually investor's interest is directly related to the equity on offer.

However, if 8Tracks is diligent about following-up with potential investors to figure out if their interest is real, this kind of research could lead the company to understand roughly how much it can raise and how much equity it should give away to tempt investors to part with their money. 

8Tracks is already a medium-sized startup company, with 30 employees and offices in San Francisco and New York (as well as satellite offices in LA, Chicago and Toronto). The company has over six million monthly active users who consume over twenty million hours of content per month, however these numbers may fall slightly as the company just announced it is curtailing access to streaming for users outside of the US and Canada, as it seeks direct deals with labels to stream music.  

Chew and 8Tracks have different approaches, but it is nice to hear that some music startups can still be an interesting proposition to investors (especially after 2016 started with a bunch of closures). 

 

(Andrea Leonelli) 

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