South African media company Media24, has invested an undisclosed amount to acquire 10% of music streaming service NicheStreem. The service focuses on emerging markets and curated music solutions.
The service is solely founded by Catherine Lückhoff, who was previously an Exco member of Silicon Cape, as well as chief business development officers and head of brand strategy at Bozza.mobi.
Though Lückhoff couldn’t give us the exact amount that Media24 had invested, she did say NicheStreem is raising a US$1.5-million round on a US$3.5-million valuation, and 50% of that has been filled so far.
NicheStream’s first and only product thus far, Liedjie, launched in 2016 as a dedicated Afrikaans music streaming service. To date, the service has over 40 000 music tracks, 1000 human curated playlists, and 11 000 registered users. It is available on Android and iOS for R49.99 per month and has cleared US$200 000 in combined B2B and B2C revenue thus far.
“Media24 is constantly on the lookout for opportunities to provide an enriched and engaging user experience to the largest digital audience in the country, such as NicheStreem’s first product, Liedjie, which is aimed at the Afrikaans music streaming market,” says head of 24.com, Andreij Horn.
“As part of this, we invest in local teams and startups that are adjacent to our core. It’s early days, but we are excited about the partnership and the positive reaction it sees across our channels.”
Ventureburn had a chance to speak to Lückhoff via email about the deal, NicheStreem, and its future.
Ventureburn: How much was invested in the company when started and how was it funded?
Catherine Lückhof: NicheStreem raised $250k in angel funding from a combination of local and international angels in January 2015 and the team started full time on 1 March of the same year. Our seed round opened in November 2016. We are raising $1.5-million.
VB: How did the investment come about?
CL: Media24 reached out to us to learn more about Liedjie and explore whether there was any potential to collaborate. This led to a discussion about our funding requirements, the terms of the seed round we had opened and their potential involvement as a strategic partner. Media24 is committed to guaranteed media exposure to help drive user uptake for NicheStreem streams starting with Liedjie — this will ultimately translate into a 10% stake in the company.
VB: Who own the other 90% of the company?
CL: I own the majority stake with the remainder apportioned to founding team members, our advisory board and our angel investors. We have never publicly released the names of our angels to protect their privacy, but what I can tell you is that they include seasoned South African, German, British and Turkish entrepreneurs, family (my father) and friends. Media24 is our first institutional investor.
VB: What will the investment be used for?
CL: 12-18 months run way (sic) with the goal of breaking even with our first stream, Liedjie.com, and launching a beta version of a second stream.
VB: How does NicheStreem compete against services like Google Play Music?
CL: Services such as Google Music, Spotify, Apple Music and Deezer, aka mass market streaming services, offer near identical catalogues with similar features at almost exactly the same price point. In other words, they compete for the same user. Smaller and cheaper services with lower overheads, focused marketing strategies and market relevant play-listing attract users who have either never heard of or considered streaming, or who aren’t prepared to pay $10 per month.
For NicheStreem the sweet spot lies in the space where the music and the culture are intrinsically (linked), hence we focus on culturally relevant streams for markets that are under-served by existing (all-you-can-eat) AYCE players.
Further reading: Why niche is the next streaming frontier, Mark Mulligan for Music Industry Blog.
VB: Does Liedjie attract listeners from outside South Africa?
CL: It does, however, the service is not currently available outside of SA due to content licensing restrictions. We aim to make it available in Namibia, the UK, Australia and New Zealand within the next six to eight months.
VB: What are the biggest challenges in running a service like this?
CL: Old school thinking and fear of change.
VB: Will NicheStreem be looking at other funding in the future?
CL: In all likelihood, we will raise an A Round to facilitate the launch and roll out of a third, fourth and fifth stream.