Mexican telecoms magnate Carlos Slim’s purported $40m investment in Shazam came as a surprise to many – why is he investing in tech out of London, and how will it affect Shazam’s IPO?
Earlier this week, Shazam announced it had taken investment from América Móvil, Carlos Slim’s telecoms operator in what is thought to be Slim’s first investment in a UK company.
The amount, said to be $40m, is not negligible, taking the total investment secured by Shazam since 2009 to $72m. This latest investment gives the Hammersmith-based app developer a valuation of “slightly above $400m”, according to reports, despite Shazam planning a $1bn IPO as early as next year.
Latin American tie-up
Shazam’s association with Carlos Slim and his telecoms empire will benefit the company. Shazam will already be preloaded onto mobile phone handsets sold by América Móvil from later this year, which will give the app a leg-up to millions of potential users across Latin America. Across its networks, the company has 246 million mobile subscribers in 18 countries.
This is echoed by Shazam’s executive chairman Andrew Fisher, who confirmed the new geographical focus: “It’s Latin America that’s going to be the focus now, alongside North America and Western Europe,” he told the FT. “Part of this is about building a relationship with Carlos Slim’s portfolio of companies.”
He also added that discussions with América Móvil started out as a business deal, before “quickly” developing into a discussion about investment. In addition to América Móvil, Shazam’s plan will also be to partner with Slim’s portfolio of internet providers and broadcasters.
Surprise investment
Slim’s investment in Shazam came as a surprise to many. Prior to his $40m slice of Shazam, Slim had never invested in any UK businesses. His only European investments were in the more classic telecoms sector, including a €4.8bn stake in Dutch telecoms operator KPN and Telekom Austria. (We should note that these investments have, unfortunately for Slim, proved to be unwise – shares in the groups fell sharply last year, ending Slim’s position as the world’s richest man.)
The billionaire’s introduction to Shazam was made through one of the app’s VC owners, Kleiner Perkins Caufield & Byers. It is understood that Shazam’s appeal is that it will help increase the use of data services across Slim’s Latin American users. An important stake in the company could also prove to be a healthy investment for Slim when the company goes public.
The investment will now help Shazam to grow its user base faster. The music-tagging service currently has 70 million monthly users (and more than 350 million users globally). Shazam’s London office will grow in line with the company’s user base – Fisher expects Shazam’s London office to double in size over the next two years. Currently, the company has around 130 employees.
But the bulk of the investment will be used to accelerate its expansion into TV. As we’ve reported previously, Shazam’s next big play is to allow users to use an advertisement’s or a TV show’s soundtrack to link viewers to the brand’s website.
“Within 18 months, we expect TV will significantly outperform the music side [of the business] and that’s part of this investment,” said Fisher.