Techstars Music, from top left: Bob Moczydlowsky (Techstars Music), Betsy McHugh (Hurdl), Patrick... [+]
Jay Z made headlines yesterday for news of his plans to launch a venture fund, but he's not the only one marrying music and tech this week: today Techstars Music revealed the inaugural class of startups for its brand-new program.
The accelerator, an offshoot of the broader Techstars operation, has eight partners--Sony, Warner Music Group, Sonos, Harmonix, Silva Artist Management, Bill Silva Entertainment, Q Prime and Era of the Engineer--who combined to pour $120,000 into each of 11 startups from six different countries. All will spend three months in Los Angeles, culminating in a demo day this May.
"We think it's a good time to invest in music, and we're willing to be patient," says Bob "Bob Moz" Moczydlowsky, Managing Director of Techstars Music, who used to run Twitter Music. "The rise in revenue from streaming is going to create a growing music business for the first time in 15 years ... we're broadening the definition of what makes a music company."
Indeed, the initial class of startups spans the major facets--some established, some still emerging--of the modern music business, including AI (PopGun, SyncSpot), content creation (Amper, Pacemaker), live music (Hurdl, Robin), metadata (Jaak), podcasting (Pippa), social media (Shimmur) and interactive (Superpowered, Weav).
The founders are as diverse as the companies they started. There's FORBES 30 Under 30 alum Jubair Jalil, who with his brother Mohammed founded SyncSpot to apply AI to retail promotions; former Keith Urban manager Betsy McHugh, who teamed with Zach Shunk to launch Hurdl, which ups fan engagement at concerts through LED wearables; and New York Times bestseller Patrick Vlaskovits, who with Gabor Szanto created Superpowered, a startup that provides audio rendering for games, VR and interactive audio applications.
"The criteria for evaluating a company is: number one, team; number two, team; number three, team; number four, market; number five, opportunity; and number six, idea," says Moczydlowsky. "We believe these are the 11 most interesting startups in music."
Each investment is structured as a $100,000 convertible note on top of $20,000 in exchange for a 6% cut of common stock. Startups receive mentoring and networking opportunities, free office space in Los Angeles for the program's three months and Techstars's equity-back guarantee. Techstars Music's partners invest in the selected companies as a unit, which can make future fundraising easier.
Interestingly, Techstars Music has full buy-in from two of the three major labels, but not the biggest: Universal Music Group, which nonetheless serves as an independent mentor to the accelerator. UMG hasn't been shy about investing in startups in the past--most notably Beats, which turned into a nine-figure gain for the major when Apple bought the headphone purveyor for $3 billion in 2014--and would be welcome to join Techstars Music in the future, adds Moczydlowsky.
Techstars Music is the first dedicated music program for the accelerator, whose total portfolio contains 905 Companies--90% of them active or acquired--with total funding of $3 billion. But Techstars has backed music companies on a case-by-case basis previously.
One of the most prominent: 30 Under 30 alum Alex White's Next Big Sound, the "moneyball for music" data cruncher that FORBES profiled in 2013. The company has since been scooped up by Pandora.
"Data has transformed industries before," White told me four years ago. "Music's the next one."
Techstars and its partners are certainly banking on that.
For more on the business of music, check out my biography of Jay Z. And for showbiz updates--and news on my next book, Three Kings--sign up for my email newsletter and follow me on Twitter.
