Stem, a distribution and payments platform, closed on a $10 million round of new financing to provide tools for independent musicians and labels to grow their businesses.
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Slow Ventures led the investment which included follow-on funding from Aspect Ventures and Upfront Ventures. The financing round also includes a convertible note. Including the new financing, Stem has raised a total of $22 million since 2015, including a $12 million round in 2016, CEO Milana Rabkin Lewis told Crunchbase News.
How it works
Rabkin Lewis started the Los Angeles-based company after spending five years as a digital media agent at United Talent Agency.
Stem enables clients to deposit music on its platform for distribution to digital media. The startup will then monetize it through Apple Music, Spotify and Google Play Music.
The method by which musicians and their collaborators are paid today is done manually, which creates a bottleneck. Stem eliminates that bottleneck by providing fintech tools for artists to manage, distribute and finance their businesses, something only previously afforded to artists at large record label companies, Rabkin Lewis said.
“As the songs are listened to, they make money,” she added. “The platforms pay us and then we issue payments immediately to all of the collaborators.”
In addition, Stem launched its $100 million artist advance fund called Scale in February to enable clients to publish work despite disruptions to touring revenue. Clients can utilize a revolving credit line based on their net share of income and can determine what percentage of their earnings they contribute to paying down the advance each month, Rabkin Lewis said.
“The timing could not have been more perfect,” she said. “After COVID-19, tours were canceled, and there were a lot of musicians missing wages. Now they can take advances from their earnings to further their careers.”
Stem’s platform is invite-only and has onboarded artists including the Zac Brown Band, Foster the People, Desiigner and Jeezy.
In July, Stem hit a milestone, distributing more than $100 million in royalty payments to artists. Half of those payments came in last year alone, Rabkin Lewis said. In addition, Stem recorded 1.6 billion streams in May and has continued to see this number grow throughout the summer months.
The company is also experiencing rapid growth at 71 percent year over year, leading Stem to use the new funds to hire, including a chief product officer to lead product development. In fact, the company has been on a hiring spree in the last few months. Most of its 35 employees came aboard during that time, Lewis said.
“Moving forward, we are really doubling down on product development, as well as how to help clients access money and collaborate, and to help shareholders get onboarded in a super clear way,” she added.
The future of music
With large concerts halted during the pandemic, we’ve reported on other startups in the space.
This week, we exclusively reported on music licensing platform Songtradr, which landed a $30 million Series C round aimed at making music discovery, licensing and the collection of royalties more efficient through its technology.
In June, we covered Wave’s $30 million Series B. The Los Angeles-based startup is reinventing the concert experience so that artists can reach new and existing fans from their homes and are able to make money in both gaming and entertainment.
Illustration: Li-Anne Dias