Looking for that next booming trend in the tech industry to sink your entrepreneurial teeth into so that you might come up with a great product to receive funding for? Well perhaps you need to look no further than music, as reports show that first quarter investments in 2010 for music tech startups nearly doubled from 2009 and 2008 figures - an upward trend entrepreneurs could take advantage of in the near future.
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Duncan Freeman, author of the site Indie Music Tech and founder of Band Metrics, estimates that around 25 investment deals in the music tech space were inked in the opening months of this year. Compared to 13 and 14 approximate investments in the first quarter of 2008 and 2009 respectively, Q1 2010 is off to a great start with huge early investment growth.
Among the largest and most notable deals of the year so far include Spotify's undisclosed amount of funding from Founder's Fund, $20 million which when to startup Guvera, and speaker manufacturer Sonos which received $25 million from Index Ventures. Other well known startups, such as SeatGeek, Songbird, TuneWiki and BlogTalkRadio all received various amounts of VC investment in the first quarter of this year.
While there was nearly twice as many investments this year than in 2008, the amounts of those investments were much smaller. Freeman's estimates put 2008's 13 first quarter investments at a value of around $90 million, an average of nearly $7 million per investment. This year's 25 investments managed just around $110 million, or just over $4 million per investment, which is no better an average than from Q1 2009 which saw around $62 million. So while more deals are going down in the music tech industry, only slightly more cash is being doled out.
It seems like the market for music startups is slowly warming and gaining traction with investors as companies like Spotify are thriving while others like Lala, which was acquired by Apple, are being snatched up by large corporations. Music could be an interesting industry to watch over the course of 2010 as these Q1 estimates suggest it could be a busy year of investments, so entrepreneurs may want to take a look at how they might provide a valuable service in this sector.
Let us know what you think about the music tech space and where you think trends may lead this year by posting a comment below!
Chart from Indie Music Tech.
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