In May, music company Kobalt announced a $75m Series D funding round, led by media firm Hearst Entertainment. Now that round has increased to $89m.
The $14m ‘second installment’ was led by former Google Ventures partner Bill Maris’ new Section 32 fund, with Maris joining Kobalt’s board of directors as part of the funding.
Maris and Kobalt have history though: while at Google’s investment arm, the Silicon Valley veteran led a $60m funding round for Kobalt in February 2015.
“Having him join our board is not only a great moment for Kobalt but also for the music industry that needs more tech experience,” said Kobalt CEO Willard Ahdritz in a statement today.
“He’s been with us since 2014 and is now doubling down to help us see through our mission of bringing the music industry into the digital age.”
Ahdritz suggested that “there is no better time than now” for Maris to join Kobalt’s board, given the way its business has diversified beyond publishing.
“We have just finished building the first and only music stack in the industry, which includes music publishing, neighbouring rights, recordings and the first digital global collection society, AMRA.”
For his part, Maris praised Kobalt’s technology, although his statement today shows that he’s a willing partner for Ahdritz’s enjoyment in winding up collecting societies.
“The royalty collection business has been stuck in the dark ages, and artists often have to wait for months or years to get paid for use of their work – if they get paid at all,” said Maris.
“Kobalt is the only company to have created a full multi-rights content management system to fix this broken business model, and I couldn’t be happier to join the board and invest again in Willard and the team at Kobalt.”
Maris left Google Ventures in 2016, and towards the end of that year was rumoured to be setting up Section 32 as a $230m fund that would focus on healthcare investments.
By May 2017, the fund closed at $150m as a “general purpose VC fund without a sector focus” – while healthcare and biotech are areas of interest for Maris, the more general focus opened the way for today’s investment in Kobalt.
Its other investments include cryptocurrency firm Coinbase; self-serve restaurant chain Eatsa; dog DNA-testing firm Embark; robo-dental surgery startup Neocis; and gluten-free quinoa firm NorQuin.
(Section 32 is reportedly named in homage to Section 31, the “autonomous intelligence and defence organisation” in Star Trek whose methods include “brainwashing, torture, assassinations and, as revealed in Star Trek: Deep Space Nine’s final season, genocide”. Its position on the ‘value gap’ remains fictionally unexplored.)
Today’s news brings Kobalt’s total funding raised so far to $205m. In the company’s last financial year for which results have been published, which ended on 30 June 2016, its revenues grew by 25.6% to $245.1m, but the company posted a net loss of $19.5m.
Back in 2015 when Maris led that $60m funding round for Kobalt, he told Music Ally what he saw in the company that made it an appealing investment.
“We don’t see them as a music industry company. We look at them as a technology company – but it happens to be in the music industry,” he said. “It’s adding a layer of trust and transparency that hasn’t existed here before, and showing that maybe this isn’t a dying industry: maybe it’s just one that had a terrible problem.”
Now Maris will be playing his part in taking that technology forward as a board member, as well as an investor.
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