‘Is Deezer really worth a billion dollars?’ asked one headline yesterday, as the streaming service announced a new funding round of €160m (around $185m) from new and existing investors. Well, is Deezer worth ‘unicorn’ status? Taking Spotify as the base for some super-rough calculations, the latter service has 180 million active users, and a current market cap of $32bn – around $178 per user.

Deezer has 14 million active users, which by that maths would mean $2.5bn, and thus perhaps even undervalued at a billion. But, of course, metrics like subscribers, revenues and net income are what’s really needed for these kinds of calculations, rather than just listeners.

In June this year, the Telegraph reported (as part of an interview with Deezer’s CEO Hans-Holger Albrecht) that Deezer had around 6.5 million paying users and annual revenues of €300m. The latter figure was just 7.3% of Spotify’s annual revenues in 2017 (€4.09bn), but even using that as a calculation puts a notional value of around $2.3bn on Deezer. In any case, all estimates are speculative until the company either sells up or goes public.

Will its new funding round help in that? Existing investors like Orange and Warner Music’s parent company Access Industries are involved in the new €160m round, but Deezer is also turning to wealthy Middle Eastern entities as new backers. Saudi Arabian investment fund Kingdom Holding Company is one of them, and media firm Rotana Group – complete with its record-label division with a catalogue of 13k Arabic music tracks – the other. The latter’s investment comes with an “exclusive, long-term” agreement for Deezer to distribute Rotana’s music in the Middle East and Africa, too.

Streaming attention in the west has focused on Spotify, Apple Music, Amazon and YouTube in recent times, with Amazon having overtaken Deezer as the third-largest service by paying subscribers. Yet Deezer has hopes of giving the global giants a run for their money in markets like the Middle East and Africa. “The new funding enables us both to accelerate our expansion in fast growing international music markets and strengthen our positions in key territories,” said Albrecht yesterday. “The exclusive long-term distribution agreement also provides us with a unique opportunity to build future market leader positions in exciting markets.”

With the funding round expected to close by the end of this month, speculation will inevitably also focus on what comes next for Deezer. The company’s attempt to go public came a cropper in 2015, but following Spotify’s DPO earlier this year, Deezer may be encouraged to take another run at the idea, although clearly not this year. Then again, thinking of the other kind of tech-company exit, if Deezer can make inroads into the Middle East and Africa, it will significantly boost its attractiveness as an acquisition – whether from a western rival or someone like Tencent, which also has ambitions in these territories.

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