It’s a hard day for news – who would trust anything published on April 1st? But, no fooling, New Zealand-based Serato has announced a deal whereby Canadian investment tech company Tiny will purchase a 66% stake of Serato.
The deal is noted to still require approval from New Zealand’s Overseas Investment Office. This is not the same part of the government that rejected the AlphaTheta bid last July (That was the Commerce Commission). This deal also has to be approved by
Tiny is a Vancouver, Canada-based company that purchases small to medium sized internet and technology companies and often adds capital and resources to them. It’s a venture capital and private equity company that specializes in buyouts with an intention to hold companies for a long time. They’re unlikely To
So far, a few things are clear:
- Serato isn’t going away. In fact, a lot of the companies that Tiny has purchased continue to operate.
- Serato is valued at $175 million in the deal (the estimate when AlphaTheta tried to buy them was $59 million).
- Serato reportedly is growing: the press details notes “35% compounded annual growth rate on number of paid subscribers over the last five years, with attractive margins”
Here’s a few quotes from the deal:
“Through our extensive meetings with Serato’s founders and team, it is clear we have a unified vision for Serato’s future and how to strategically and thoughtfully expand upon its strong legacy. Serato represents the ideal acquisition for Tiny with its market leadership, long history of growth and profitability and unparalleled track record of innovation. This acquisition perfectly demonstrates our investment thesis: partnering with exceptional businesses, supporting their continued growth, and generating long-term value for our shareholders,” said Jordan Taub, Tiny CEO.
AJ Wilderland, Co-founder of Serato, said “[Tiny’s] long-term vision and strategic approach align with the future we’ve always envisioned for Serato. This partnership not only accelerates our growth but also provides the ideal long-term home for the next chapter of the business we’ve nurtured from the ground up.”
Young Ly, CEO of Serato, added “We are excited by the many ways Tiny’s unique long-term approach and track record with companies like Letterboxd, AeroPress and Metalab accelerate how we create value for our users, while retaining our headquarters in New Zealand. This is strengthened by their respect for our legacy and growth mindset for the future of our business.”
What could this deal mean for DJs?
Here’s a few speculative things that we can assume from this news – again, none of these are verified yet as the deal is still pending and folks are tight-lipped:
- Serato’s owners really wanted an exit – this is a financial reality for a lot of companies with founders of companies in niche spaces, and with the AlphaTheta deal over last year, this deal makes it more clear that the goal was a financial transaction .
- We’ll see more subscription model expansion – 62% of of Serato’s revenue reoccurs annually (aka, subscriptions) – and so it would make sense to expand what the offerings are in that part of the business.
- It’s probably not a deal to make another deal: This is very speculative, but based on the ethos of Tiny, it seems very unlikely that we’d see them turn around and sell their stake to another company in the DJ space in the short term.
- Serato will get to develop something new: this one is still nebulous, but often times the big win of taking outside investment is to realize previously impossible projects due to their scale. Serato Stems wasn’t first (djay Pro and Virtual DJ came first), but it did bring a tool to many more DJs. Perhaps there’s another similar opportunity with Tiny’s backing.
What do you think this means for Serato DJs? Let us know your thoughts below.
