While the DJ community continues to watch Native Instruments with a simplistic “when will we see Traktor Pro 4?” lens, the Berlin-based company has been busy raising cash. They’ve received a massive investment of $59,000,000 from EMH, a private equity firm. Keep reading for the details.
EMH’s Native Instruments Investment
As reported on Crunchbase, Native Instruments raised €50 million (~$59 million) from EMH, a private equity firm “providing growth capital for technology-enabled companies”. EMH did this under their Digital Growth Fund – which is “dedicated to the digital transformation of small and medium-sized enterprises (SMEs) in Europe” according to InvestmentEurope.net, “Native Instruments marks the fund’s first investment in a music technology company.”
This might feel familiar to previous massive business moves in the industry. Top of mind is when Pioneer sold their DJ division to investment firm KKR for $550 million. In the years following, we’ve seen Pioneer DJ start churning out non-stop product updates to all of their lines with a focus on maximizing return on investment. It’s not hard to imagine
What Problems Could $59m Solve?
“Native Instruments will continue to improve upon several of its existing products aimed at innovating around the DJ-producer experience, including the popular DJing software Traktor and the Stems technology, which breaks tracks into its component parts for live remixing.” – Billboard
Fifty million dollars is a lot of cash – but when receiving such a large sum from an investment firm, there’s often a very clear plan for how that investment will pay out. Native Instruments’ leadership would have been expected to present a number of profitable solutions to problems that a large financial investment could solve for the company.
Here’s a few totally speculative high level problems that I can easily imagine being on their shortlist:
- Unstick slow development in the DJ division. While Stems were an interesting new workflow, Traktor has felt mostly abandoned in recent years, with only occasional updates that feel like maintenance instead of innovation and modernization.
- Bridging the gap between production and live performance workflows. NI started to do this with Stems, but there could be a new hardware/software workflow that would actually change how electronic musicians perform. For example, instead of requiring DJs to buy all new Stems content, what if Traktor had a built-in tool for creating Stems from normal tracks using machine learning?
- Designing, prototyping, and bringing to market a standalone (with Traktor DJ built-in) Kontrol lineup. Native Instruments’ biggest success in the DJ world was the original Kontrol S4. Could you imagine a standalone S4, and how popular it might be? What about standalone versions of every Kontrol product?
- Actually toppling Pioneer DJ’s stranglehold. The Japan-based industry giant still has a firm grasp on the DJ industry with their players, mixers, and controllers. While Denon DJ and other InMusic companies have submitted their own challengers to the ring, sales numbers that we’ve seen don’t seem to show a massive shift in what gear people are buying. Like Pioneer DJ, Native Instruments has the complete ecosystem (solid, tested software with highly integrated hardware). What if they designed their own CDJ or DDJ killers?
There does seem to be a big focus on the future of music creation, not curation, in the language around the investment. We suspect this is because, historically, music production appears to have been the biggest money-maker for NI. Check out this quote from their CTO:
“We believe music creation products and services should be integrated in a more appealing, intuitive and cohesive way. We foresee an easily accessible music creation ecosystem that connects user centric design, with powerful technology and data, to further enable the music creators of today, and welcome the new creators of tomorrow.” – Mate Galic, CTO and President of Native Instruments
Hiring Talent: The First Step
One thing is very clear from the coverage of this financial transaction: Native Instruments wants to first focus on getting the right people employed in their offices to take on the challenges.
If you’ve watched the company’s Careers page over the last year, it’s seemed that there’s a gap in leadership on the DJ side of the company. They continue to look for a Director Of DJ Products – someone to create and drive software/hardware visions forward.
“Native Instruments will be focused on recruiting tech talent in Berlin, Los Angeles and London in the coming year. The company has made a handful of key hires in Berlin and Los Angeles over the last 12 months — including the acquisition of remix monetization startup MetaPop, whose former CEO Matthew Adell now serves as Native Instruments’ chief digital officer.”- Billboard