Utopia is raising €300 million in a Series C round that would value its company at €2.5bn. But what’s it building?

Utopia Music (Utopia Music AG) continues to be one of the most talked about and acquisitive startups in the modern music business – though not everyone, as yet, has fully got their head around exactly what it’s building.

The Switzerland-headquartered company’s oft-repeated slogan is “fair pay for every play”, while it bills itself “a Swiss Music fintech company leveling up the music industry through clear, transparent, and reliable data-based solutions”.

Outside of its recent flurry of acquisitions, that claim appears to center upon Utopia’s proprietary music monitoring platform, sometimes referenced as the ‘Utopia Open Platform’ (UOP).

UOP makes a log whenever tracks are spun/played on radio stations and other broadcasters around the world, as well as identifying plays on streaming platforms and ingesting track/song metadata.

Industry sources suggest that Utopia is aiming to build such a comprehensive music data-ingesting machine that PROs and major music companies will have no choice but to adopt/license the platform for their own data processing in the future.

Such an outcome – depending on the licensing model – could potentially see Utopia receive a small payment from near-enough every music transaction globally.

Some remain unconvinced by that possibility. “It’s one thing to tell PROs that you have better data than them and even that your platform can eradicate the ‘black box’,” said one music publishing veteran. “It’s quite another matter to think you can convince them all to unilaterally sign up to your platform, and to change their payouts.”

Others are more positive. “The PROs showed they can’t be trusted to build a Global Repertoire Database themselves a few years ago, when their joint project completely imploded,” said one senior industry source.

“The modern music business demands the transparency of one trusted source of global data. If that ends up being built by a startup in Switzerland, so be it.”

Interestingly, focusing on building an “agnostic” data engine for the global music industry is not exactly how Utopia began life.

In a 2017 Bloomberg article, Utopia’s Swedish founder, Mattias Hjelmstedt, reportedly likened his startup, at that point, to “a new kind of record company”.

Bloomberg suggested that Utopia would “produce and book live performances and handle artist logistics, such as flights, cabs and hotel rooms” for talent that signed to its company.

At the time, Hjelmstedt described Utopia as “a blend of a record label, a publisher and a management company that works with artists to shrink the value chain and use technology to transparently extend their reach”.

By 2019, though, sources tell us that Utopia was sending out investment decks talking up the power of its ‘Utopia Open Platform’, and even comparing itself to one of Big Tech’s biggest names.

Google makes sense of ALL web data,” the deck apparently read. “Utopia makes sense of ALL music data.”

Utopia Music: The founder

In Mattias Hjelmstedt, Utopia has one of the more interesting founders currently working in music.

Before launching Utopia in 2016, the serial entrepreneur was, at various points, involved in a professional eSports team (specializing in the video game Counter-Strike), as well as co-founding two notable media streaming startups in Scandinavia: Voddler and Magine.

Voddler, which was originally founded in 2005 and then re-launched in 2008/2009, was a VOD platform that some suggested was Sweden’s answer to Netflix. (Spotify co-founder Daniel Ek tried Voddler, but famously didn’t rate it.)

Voddler raised over SEK 200 million in venture capital from the likes of Nokia Growth Partners and Deseven, but following a series of heavy financial losses it tumbled towards bankruptcy in 2018. (The bankruptcy of Voddler Group AB was completed in March this year, according to filings in Sweden.)

Hjelmstedt also co-founded Magine, which launched in Sweden and Germany in 2013 as a cloud-based TV platform that allowed broadcasters to deliver live and time-shifted content to users. After its launch, Magine was soon being dubbed “Spotify for TV” by an enthusiastic tech media.

Magine’s consumer-facing platform was discontinued in 2019, however, following a string of annual losses at the company.

Magine continues to live on today as a B2B service, Magine Pro, helping TV and video companies operate their consumer offerings via its SaaS platform. According to company filings in Sweden, Magine Holdings AB has continued to post annual losses in its last five fiscal years (FY 2016-2021, see below).

Clearly, Mattias Hjelmstedt is skilled at generating excitement for his tech-driven startups, both within the news media and in the investment community.

And with Utopia Music, he’s already built by far his biggest company yet – one that has acquired a range of well-known music businesses over the past 12 months.

In the UK, these have included Sentric Music, Proper Music Group, and Absolute Label Services.

In the US, Utopia’s M&A targets have included ROSTR, Quincy Jones’ Musimap, plus Lyric Financial – which advances royalties to independent artists.

Following that Lyric Financial acquisition in October last year, Mattias Hjelmstedt boasted: “[Utopia is] supercharging the entire music industry by creating new revenue streams, consolidating data, reducing administration costs, and offering a broad spectrum of diverse and deeply innovative services and effectively removing roadblocks and showstoppers that have slowed the industry down for too long.”

Now, according to sources familiar with Utopia’s business, speaking anonymously to MBW, the company is looking to raise hundreds of millions more in capital, via a Series C investment round.

Utopia is hoping this Series C will give it a valuation in the multiple billions.

Utopia Music: The Series C ambition

MBW’s sources have seen evidence that at least one investment agent is currently offering would-be backers of Utopia a “pre-Series C investment opportunity” at a €1.5 billion pre-money company valuation.

Utopia is apparently seeking a “strong institutional investor” to lead this pre-Series C round.

This, though, is just the appetizer. The entrée is Utopia’s planned Series C round later this year, in which it is looking to raise €300 million.

MBW’s sources tell us that UBS has been appointed to deliver this Series C round at an estimated €2.5 billion to €2.7 billion valuation for Utopia.

Utopia has apparently completed legal/financial due diligence with a number of financial institutions – including BearingPoint, PWC, UBS and others – ahead of this Series C raise.

MBW’s sources confirm to us that Utopia has already successfully raised over €100 million in the past five and a half years

The “pre-Series C” information sent out by agents on behalf of Utopia, say our sources, suggest that the company booked around €109.6 million in revenues and €18.3 million in gross profit in 2021.

Utopia is now apparently on course for €163.6 million of revenue and €47.5 million in gross profit for 2022, and is also targeting that it will turn EBITDA-positive (with revenues of more than half a billion Euros) in 2023.

The company hopes to scale to “near €800 million” in EBITDA, we’re told, by 2026.

To run you through that again: According to MBW’s sources, Utopia is planning to turn a currently EBITDA-negative company into an €800 million-EBITDA-positive company in just the next four years.

Utopia has grown to over 650 employees to date, say MBW sources who’ve seen the data, following the acquisition of 13 music tech companies over the past 12 months.

Using the pre-Series C and Series C funding it’s currently raising, Utopia apparently intends to acquire 13-plus more music tech companies over the next 12 months.

(MBW reached out to Utopia for comment on these figures earlier today, but we have not heard back.)

Utopia Genesis Foundation, and dabbling with crypto

Utopia, remember, is now a six-year-old startup. And, as we nodded to at the start of this article, like a lot of startups, it’s made pivots along the way.

Also like a lot of startups, it’s dipped its toe into the world of crypto.

In 2020, Utopia Music AG formed an affiliation with a legally separate platform, Utopia Genesis Foundation (UGF). UGF carried the same ‘Utopia’ branding as its namesake company (see inset).

UGF intended to mint 100 million cryptocurrency tokens with an estimated market cap of USD $3.8 million, of which Utopia Music AG would receive 30 million, according to a white paper issued in April 2020.

This white paper suggested that Utopia Music AG would receive these tokens “as compensation for creating and developing different applications that Foundation buys, but also as an incentive to continue the development of applications on Utopia Platform that will thereafter be beneficial to the Foundation”.

Those tokens raised over USD $2.5 million from when they launched in December 2020. They’re now close to being worthless.

According to Coinbase data, the $UOP token launched in December 2020 at USD $0.326 per token, rising to a peak of $0.540 in April 2021.

Today, however, that value has flat-lined: it’s worth $0.0058 per token, around 1/93rd of its price at peak last year.

In a July 2021 Medium piece – the last to appear on the Utopia Genesis Foundation (UGF) account to date – the UGF said: “Tokenized assets within the industry will be paid for by our token, hence as our platform transactions/artist asset volumes increase, our $UOP appreciates in value.”

That, obviously enough, wasn’t how things played out from therein on.

Source: CoinBase

Perhaps the most telling information on Utopia’s one-time ambition in the crypto field can be found in a job description posted by Utopia Music AG for a Business Development Analyst back in 2019, that still exists online.

The ad, which appeared over a year before the launch of UGF’s $UOP token in 2020, read: “In order to fund the development of the [Utopia Online Platform], Utopia Music is conducting a state-of-the-art Security Token Offering (STO) in 2019.

“By partnering with the likes of PwC, IBM and Vice Media, Utopia can ensure best-in-class execution across all aspects of the token sale, while focusing on growing the platform.

“Just as importantly, Utopia has already secured some substantial traditional financing – and is on its way to raise even more – providing the company with the wings it needs to take off and start with its publishing catalogue acquisition strategy.”

(Those last few words are interesting, right?! Utopia is definitely not interested in buying catalogs these days, a company spokesperson told MBW in late 2021. Anyway, back to the crypto thing…)

Today, the official Utopia Genesis Foundation website is no longer live, and the UGF hasn’t posted on its Twitter account since January this year.Music Business Worldwide