The booming field of digital music creation tools once again found itself in the spotlight in recent weeks, after TikTok parent ByteDance unveiled Ripple, a free-to-use music production app that features an AI “melody-to-song” generator and a virtual recording studio.
TikTok’s large and music-focused user base gives Ripple a decent shot at success, but even so, the product will be entering a crowded field.
On top of that, there are numerous startups and SMEs that offer DAWs and other music-creation tools that vary greatly in terms of complexity, ease of use and price. Some of these companies are relatively recent startups; others date back to the 1990s, when digital technology as a consumer product was just beginning to take off. Almost all, today, offer or are working on AI-enhanced products.
This has led to some discomfort in the music industry among people who wonder what the increasing ease of music creation will mean for professional musicians and music recording companies. However, those concerns have been largely brushed off by one major sector of the economy — private equity firms, which see in music creation tech an opportunity for a major payday.
Over the past several years, PE firms have poured significant sums of money into music creation products they hope will become the next big thing – or at least big enough to sell at a decent profit.
The growth of PE in the music tech space may have as much to do with the growth of PE itself as with the growth of music creation tech. Private equity has boomed in the past decade, with the number of funds exploding to around 18,000 as of 2021, a 60% jump in five years. According to McKinsey, PE now has $11.7 trillion in assets under management, and that number has grown by around 20% per year since 2017.
Simply put, private equity is increasingly where the money is – and so private equity is increasingly where funding for music creation tech comes from.
It’s worth noting that not all the tech companies operating in the music creation space have taken massive cash injections from PE. For the owners of some of these companies, relinquishing some degree of control to investors risks compromising their vision or business strategy, and they may see it as not being worth it.
That certainly seems to be the case with Berlin-headquartered Ableton, maker of DAWs that have found fans among DJs such as Skrillex, deadmau5 and Steve Aoki. The company’s co-founder, Gerhard Behles, reportedly turned down “a significant payday” from a group of investors that included Scooter Braun and renowned DJ Diplo.
In Ableton’s case, that may have to do with the company’s focus on altruism; for instance, the company aims to give away free copies of its marquee product, Ableton Live, to schools. An approach like that could come under pressure from PE investors looking for the highest possible ROI.
Nevertheless, plenty of music creation tech developers have taken advantage of PE cash to develop new products, acquire adjacent or competing businesses and market their brands.
Below is a by-no-means-exhaustive list of some of the independent audio tech companies that have caught the eye of private equity…
When Spotify Co-Founder and CEO Daniel Ek announced that it was his company’s goal someday to have 50 million music creators on the platform, MBW pointed out that another platform had already surpassed that goal – BandLab, which, as of earlier this year, counted 60 million creators on its social music creation platform. And that was up from 50 million just half a year earlier.
Founded in Singapore in 2015, BandLab Technologies has become one of the most prominent names in music creation tech. Besides the BandLab platform, the company also owns the Cakewalk DAW, and it’s easily one of the largest magnets for venture capital in this space.
Last year the company closed a Series B funding round at $65 million, giving it a valuation of $315 million. The lead investor was Vulcan Capital, the multi-billion-dollar firm founded by the late Microsoft co-founder Paul G. Allen.
Other notable investors included Prosus Ventures, the Netherlands-listed venture investment arm of Prosus, which is majority-owned by Naspers and is the largest shareholder of China-headquartered Tencent. Singapore-based K3 Ventures, known for its investments in ByteDance/TikTok and Grab, also participated in the funding round, as did BandLab Technologies’ parent company, Caldecott Music Group, which also owns a number of music-related media brands, including NME, Guitar, MusicTech and, until recently Uncut, which was acquired by Kelsey Media.
Earlier this year, BandLab Technologies raised another $25 million in a Series B1 funding round, valuing the company at $425 million. Once again, Vulcan Capital (now spun off into Cercano Management) and Prosus Ventures were among the key investors.
BandLab has used the money to grow its staff and fund emerging creator campaigns, but the company has also engaged in some of the consolidation seen in the music tech space of late. In February of this year, it acquired beat marketplace Airbit, which at the time said it had around 800,000 users who had bought and sold some 2 million beats on the platform , for a turnover of around $50 million.
In 2014, Montreal-headquartered LANDR launched what it called the first AI-powered music mastering service, allowing musicians to master tracks instantly without the help of an engineer.
A year later, the company raised $6.2 million in its initial funding round from investors including Warner Music Group, rapper Nas and Plus Eight Eighty Equity Fund, operated by DJs Pete Tong, Richie Hawtin, and John Acquaviva.
Since then, the company has been shaking up the music creation space, launching such new products as a distribution service to streaming platforms like Spotify, rent-to-own plugins for its tech, promotion tools, collaboration platforms and even music sample packs.
By 2019, the company was working with more than 2.5 million artists, songwriters, composers, producers, engineers and labels from 160 countries around the world. That year, its Series B funding round raised $26 million, led by Sony Innovation Fund, and including, once again, Warner Music Group and Plus Eight Eighty Equity Group. Other participants included Quebec’s province-run financing corporation Investissement Quebec and Fonds de solidarite FTQ.
In all, according to Crunchbase, LANDR has raised a total of $41.7 million across nine funding rounds, the latest being in March 2022.
With that money in hand, the company has been unrolling new products and making acquisitions. In 2020 it unveiled Creator, an AI-powered tool that allows users to create “almost infinite possibilities” from the company’s database of over a million sounds. The tool allows artists and producers to quickly preview up to eight loops together for online playback. The loops are automatically adjusted for pitch and time-stretched to match the chosen key and tempo.
In 2021, the company acquired Synchro Arts, makers of the VocAlign and Revoice Pro audio apps, which are now plugins available through LANDR’s store.
Founded in Berlin in the late 1990s, Native Instruments produces both hardware and software for music creation. The company’s quarter-century journey has taken it from being an independent startup to being a brand within a family of audio tech companies owned by New York-headquartered private equity group Francisco Partners.
Native’s, Stephan Schmiit and Volker Hinz, built the company around Generator, a modular synth software application that would later form part of Reaktor, the company’s signature modular software music studio (i.e., a software package built around plugins that creators can use to customize their virtual studio).
Native Instruments’ union with venture capital first arrived in 2017, when EMH Partners – a Munich-headquartered private equity firm focused on Germany, Austria and Switzerland – put €50 million into the firm. In 2020, EMH expanded its investment, taking a majority stake in Native Instruments, and – as private equity tends to do – it then sold the company, giving Francisco Partners majority control of Native Instruments. (Francisco Partners is also an investor in ticketing tech firm Eventbrite and acquired a majority stake in Kobalt Music Group in 2022.)
With EMH as a minority partner, Francisco Partners combined Native Instruments with Cambridge, Massachusetts-based audio tech developer iZotope, as well as audio plugin makers Plugin Alliance and Brainworx, to form Music Creation Group, later rebranded as Soundwide.
That branding lasted little more than a year, before the company announced it would revert to using the Native Instruments moniker – proving, once again, the value of a recognizable brand.
Output calls itself “a tech company built by musicians,” and indeed it is. The company was founded in 2013 by Gregg Lehrman, an award-winning composer who got his start under Hans Zimmer, and who remains the company’s CEO to this day.
The company’s signature product, Arcade, is a playable sampler and instrument plugin that was “originally intended to help professionals seamlessly turn a library of tens of thousands loops and sounds into tracks,” the company says, but has since evolved into a tool that “allows the world’s top artists to break through writer’s block, and the rest of the world to break into music making.”
The company boasts that its technology has been used for music creation by Drake, Coldplay, Justin Bieber and Rihanna, and was involved in the creation of the musical scores for Stranger Things, Game of Thrones and Black Panther.
In 2020, the company raised $45 million in a Series A investment from Summit Partners, a Boston-headquartered investment firm with $35 billion in assets under management that has also put money into tech companies like Uber, Hyperion, McAfee and Webex.
The following year, Output launched Arcade 2.0, which added playable instruments to the platform’s library, “allowing music makers to craft entire songs and scores with a single tool.”
“What you can do in Arcade used to take a dozen different plugins,” Lehrman said at the time. “Now, you’ve got vocal chops, chords, melodies, basslines, loops, samples and one shots – all in a single place, all refreshed daily. I wish I had this when I was making music all day, every day.”
New York-headquartered Splice launched Splice Studio – a cloud-based collaborative music-making platform – back in 2014, following that up the following year with Splice Sounds, a subscription-based marketplace for pre-cleared samples.
Splice continued the product rollouts in 2016 with Rent-to-Own, a subscription-based service that gave users access to premium music products such as synths, and in 2019, it launched Similar Sounds, an AI-driven search engine that can find similar tracks in Splice’s library of sounds.
Despite the consistent expansion, the company pulled back a little in 2023, announcing that it’s shutting down its original product, Splice Studio.
“Simply put, we haven’t been able to provide the quality of experience of which we can be proud,” CEO Kakul Srivastava said in a blog post, noting that Splice Studio hadn’t been an area of focus for the company since 2017.
Yet what makes Splice stand out from the crowd is the sheer amount of investment capital the company has attracted over the past several years.
According to Crunchbase, the company has raised $159.7 million across six funding rounds, including a 2019 Series C round that brought in $57.5 million from investors such as Union Square Ventures and True Ventures (both already investors in the firm at that time), as well as DFJ Growth, Liontree and Matt Pincus, founder of SONGS Music Publishing.
By 2022, when it launched an AI-powered music-making app, the company claimed 4 million users and had paid out about $30 million in royalties to music publishers for use of their material on Splice Sounds.
With cash in hand, the company has been able to complete some significant acquisitions, including Superpowered, a tech firm that provides audio for thousands of apps, and music creation startup Audiaire, helping Splice to consolidate its market position.
The company has also launched partnerships with streaming services, including one with SoundCloud focused on creating a new emerging-artist platform called Nova, and another with Africa-focused music streaming service Boomplay.Music Business Worldwide