To strengthen expansion, Verdane invests in Propellerhead, becoming majority shareholder

[jam-s]

It's all to pay Fraunhofer for the license so we can finally have MP3 export!!

Bleh, who needs MP3 when we could have the far superior ogg-vorbis for free?!

[fieldframe]

The more I think about this, the more excited I am for the future of Reason. Remember what a big surprise Record was? Or when Rack Extensions were announced? This is going to enable more of these surprises, and even bigger ones.

[Oquasec]

that's what converters are for. Pazera is one of the best ones out there and probably not gonna be topped by a stock implementation.

[stfual]

Venture Capital companies invest other peoples money to make them rich.

A typical VC deal will raise the money by offering an amazing investing opportunity and then sell that money for a percentage and a share of the company. On a fairly high risk VC deal I was on the fringes of the VC wanted a $200K fee per $1 million raised (20%) on which the investor expected to get 1.5 million back after 5 years. They also expected to own a big chunk of the company, which would be achieved by devaluing the employee share options. (The deal didnt proceed and the company folded).

You can make money from an existing company in a few ways.
1: Help bring a new innovative product to market and go public - i dont see this with Reason its too mature.
2: Clean up the company reduce costs change the pricing or delivery model and sell it as a profitable cash cow.
3: A bit of both and sell it to someone bigger and higher up the food chain - e.g. an Apple or Microsoft or Adobe or Yamaha

My suspicion on Propellerhead based on the Line 6 clean up, the Forum shenanigans and the attempt at "populist"** cloud integration/ sharing is they wanted to sell, have a potential buyer who is luke warm and probably not offering enough cash and they want to raise the profile and jazz the product up a bit.
Like all things in life it comes down mostly to execution of the idea not the idea itself.

To be absolutely clear I have no idea on the inside workings of this deal but VC companies aren't warm and fuzzy. They invest and get paid for financial returns nothing else.

Propellerhead has been sold. Verdane now own Propellerhead as the majority shareholder. If you've sold more than half the company you don't own it any more. The VC can and will do whatever they want to make their investors money.

** "The Cloud" or "Cloud integration" was a VC wet dream buzzword you had to have in your presentation if you wanted to raise funds a few years back. It was a bit like "Internet startup" in 1998

[raymondh]

Venture Capital companies invest other peoples money to make them rich.

A typical VC deal will raise the money by offering an amazing investing opportunity and then sell that money for a percentage and a share of the company. On a fairly high risk VC deal I was on the fringes of the VC wanted a $200K fee per $1 million raised (20%) on which the investor expected to get 1.5 million back after 5 years. They also expected to own a big chunk of the company, which would be achieved by devaluing the employee share options. (The deal didnt proceed and the company folded).

You can make money from an existing company in a few ways.
1: Help bring a new innovative product to market and go public - i dont see this with Reason its too mature.
2: Clean up the company reduce costs change the pricing or delivery model and sell it as a profitable cash cow.
3: A bit of both and sell it to someone bigger and higher up the food chain - e.g. an Apple or Microsoft or Adobe or Yamaha

My suspicion on Propellerhead based on the Line 6 clean up, the Forum shenanigans and the attempt at "populist"** cloud integration/ sharing is they wanted to sell, have a potential buyer who is luke warm and probably not offering enough cash and they want to raise the profile and jazz the product up a bit.
Like all things in life it comes down mostly to execution of the idea not the idea itself.

To be absolutely clear I have no idea on the inside workings of this deal but VC companies aren't warm and fuzzy. They invest and get paid for financial returns nothing else.

Propellerhead has been sold. Verdane now own Propellerhead as the majority shareholder. If you've sold more than half the company you don't own it any more. The VC can and will do whatever they want to make their investors money.

** "The Cloud" or "Cloud integration" was a VC wet dream buzzword you had to have in your presentation if you wanted to raise funds a few years back. It was a bit like "Internet startup" in 1998

Agreed.

I would add (4) don't change the profitability of the company (by changing revenue or costs) but change the parameters that affect the year-on-year projected revenue streams, as a way of driving up the perceived value of the company for on-selling.

The process may take a number of years to achieve. What we can be sure of is it's unlikely to remain status-quo at Props HQ for very long

[Loque]

I am sure, the money will be invested in a Reason cloud service.

What do you mean by Reason cloud service?

It was a joke... I hope...
But today everyone wants to go into the cloud, even my mouse driver.

[SA Studio]

Venture Capital companies invest other peoples money to make them rich.


Propellerhead has been sold. Verdane now own Propellerhead as the majority shareholder. If you've sold more than half the company you don't own it any more. The VC can and will do whatever they want to make their investors money.

** "The Cloud" or "Cloud integration" was a VC wet dream buzzword you had to have in your presentation if you wanted to raise funds a few years back. It was a bit like "Internet startup" in 1998

Wow. I guess that's one way look at it.

[Tumble]

Venture Capital companies invest other peoples money to make them rich.

A typical VC deal will raise the money by offering an amazing investing opportunity and then sell that money for a percentage and a share of the company. On a fairly high risk VC deal I was on the fringes of the VC wanted a $200K fee per $1 million raised (20%) on which the investor expected to get 1.5 million back after 5 years. They also expected to own a big chunk of the company, which would be achieved by devaluing the employee share options. (The deal didnt proceed and the company folded).

You can make money from an existing company in a few ways.
1: Help bring a new innovative product to market and go public - i dont see this with Reason its too mature.
2: Clean up the company reduce costs change the pricing or delivery model and sell it as a profitable cash cow.
3: A bit of both and sell it to someone bigger and higher up the food chain - e.g. an Apple or Microsoft or Adobe or Yamaha

I wish. Comparing Reason changelogs to ones from LPX is depressing.

[Gulale]

It's all to pay Fraunhofer for the license so we can finally have MP3 export!!

Yes!!

No need to worry PH has been waiting until the patent expires and it will at the end of this year so they will give you MP3 then.

[Exowildebeest]

It [Verdane] prefers to invest in Central and Northern Europe. It typically invests between €1 million ($1.19 million) and NOK 40 million ($6.57 million) per transaction and between NOK 30 million ($4.93 million) and €50 million ($69.53 million).The firm seeks board representation in its portfolio companies and a minority stake. It usually makes control investments. The firm seeks to buy either a complete portfolio of unlisted assets, parts of a portfolio or a single shareholding. It prefers to exit its investments between five years and seven years. The firm seeks to exit through a trade sale of the company, an initial public offering or, sale of holding to new owners.

https://www.bloomberg.com/research/stoc ... apshot.asp

Interesting. This supports Stfual's theory on a potential re-sale in the future.

[avasopht]

from a financial perspective, Propellerhead must not have been doing too well for him to selloff a majority share of his company, which has been his life's work over the past 20 years.

Investors don't randomly invest in small companies in niche markets without doing their due diligence and seeing evidence that they can make a significant profit.

Propellerhead likely has a lot of metric data on the responses from their emails and facebook ads to get an indication of their growth potential. With more cash from investment they can better act on the data they have been collecting.

Hopefully some of that cash will go towards a kick ass sound bank.

[SA Studio]

It's all to pay Fraunhofer for the license so we can finally have MP3 export!!

Yes!!

No need to worry PH has been waiting until the patent expires and it will at the end of this year so they will give you MP3 then.

Wow! That's really a thing, huh? Awesome!

Working with studios over Facebook and interwebs, I always need to pass MP3's around. Mulling over the far-less than 5% difference between a WAV and a 320kps MP3 isn't time I waste. Passing around MP3's is nice and it's one less step if we could do it straight from Reason.

Of course I have other DAWs and converters. Reaper can export in literally most every major format, including video, you could ever possibly want. But being able to export an Mp3 from Reason is a practical feature that will be nice to see added.

EDIT: It's 2017 and I'm talking about Mp3 export in a DAW - lol.

[miscend]

Venture Capitalists are the worst thing that can happen to any company. They are highly profit driven and are pretty ruthless with businesses that don't start delivering big returns on their investment pretty early. Many small businesses have been destroyed by these type of investors, sometimes they are merely looking for valuable assets which they can sell.

[Data_Shrine]

Let's hope it's not the end of PH then.

[decibel]

lets hope we atleast get an amazing R10 version before they kill & bury the company lol

[Data_Shrine]

The problem is, if they kill and bury them, the authorizer wont work anymore, we will lose everything when our "reason" computer dies out (or if we update the OS on mac..) So that's scary. ;_;

[EnochLight]

The problem is, if they kill and bury them, the authorizer wont work anymore, we will lose everything when our "reason" computer dies out (or if we update the OS on mac..) So that's scary. ;_;

This will not happen.

[stfual]

Based on these two defintions this would be a private equity deal not a venture capital deal. Private equity is about "improving" existing companies and selling them on. VC is about gambing on a larger pool of unknown companies and hoping that a couple of them fly.

http://www.investopedia.com/ask/answers ... apital.asp
http://www.mergersandinquisitions.com/p ... e-capital/

There is also an article here in Swedish with partial Google translation below. I've added approximate values for $US

http://digital.di.se/artikel/verdane-ko ... pellerhead

............ We are entering a new phase now

Since then, the company's service Reason, which costs just over 3500 crowns ($US 390 ), has become popular among both professional musicians and dedicated amateurs. The product competes with Apple's Logic and Pro Tools, developed by Avid Technology.
"We are entering a new phase now," says Ernst Nathorst-Boos, including with respect to the sale of additional services has increased.

It involves instruments and sounds that can be added to the digital music studio. With Verdane Capital ( NTL ) as majority owner Propellerhead will develop more services for mobile users.

Neither party would disclose the price tag. But Verdane, which took in about 3 billion ($US 330M) in its most recent fund , becomes the majority shareholder.

"We both like software, music, and e-commerce," said Pål Malmros, a partner at the venture capital company's Stockholm office.
Verdane has previously made a number of investments in these areas, where e-commerce services Mathem and Baby Shop, as well as the digital Undertaker Funera are a few recent examples of investments. The strategy is usually to buy the entire portfolio of companies from other investors.

"Now we want to take Propellerhead on e-commerce track and get better at digital sales," forstsätter Pål Malmros.
Last year turnover of Propellerheads just over 100 million (US$ 11M) , with an operating margin of over 30 percent. In recent years, growth has been over 15 percent, according to the company.

"I will remain as CEO of the company and will be the largest minority shareholder," said Ernst Nathorst-Boos.
Competition is great even from free online music services. But the hope is that Propellerhead melody to continue to attract digital purchases.
"Obviously, we do something that people think it is worth paying for," says Ernst Nathorst-Boos.

[Faastwalker]

The problem is, if they kill and bury them, the authorizer wont work anymore, we will lose everything when our "reason" computer dies out (or if we update the OS on mac..) So that's scary. ;_;

This will not happen.

This worries me as well. Reason barely works without Internet access and / or constant updating via the Authorizer. If Reason does go the way of the Dodo (nothing good last forever) where would this leave us?! If it does continue to work there will come a time when it no longer will. That's a very sad thought, although hopefully unlikely. I guess I'm just very nervous about change. There are no certainties, less so now, or so it feels.

[QVprod]

The problem is, if they kill and bury them, the authorizer wont work anymore, we will lose everything when our "reason" computer dies out (or if we update the OS on mac..) So that's scary. ;_;

This will not happen.

This worries me as well. Reason barely works without Internet access and / or constant updating via the Authorizer. If Reason does go the way of the Dodo (nothing good last forever) where would this leave us?! If it does continue to work there will come a time when it no longer will. That's a very sad thought, although hopefully unlikely. I guess I'm just very nervous about change. There are no certainties, less so now, or so it feels.

Actually anyone who has an ignition key would continue to be able to use it as long as it can be installed. That aside. If you read the article, there's actually no reason to be concerned. Verdane would not have invested in Propellerhead if they weren't already doing well. No smart investor invests in a failing business. This just means Props can do more since there's more funding. They still have creative control. CEO is still the same.

From Verdane's website "Verdane funds invest mainly in the consumer internet, software, energy and advanced industrial sectors, in companies with a strong growth potential"

[EnochLight]

The problem is, if they kill and bury them, the authorizer wont work anymore, we will lose everything when our "reason" computer dies out (or if we update the OS on mac..) So that's scary. ;_;

This will not happen.

This worries me as well. Reason barely works without Internet access and / or constant updating via the Authorizer. If Reason does go the way of the Dodo (nothing good last forever) where would this leave us?! If it does continue to work there will come a time when it no longer will. That's a very sad thought, although hopefully unlikely. I guess I'm just very nervous about change. There are no certainties, less so now, or so it feels.

Again, it won't happen. Relax.

As pointed out already, a VC group doesn't pay millions for a company and its flagship product just to kill it off. Whatever happens, it's more likely that a solution would be offered to keep Reason (and its ecosystem) a reliable cash cow. Breaking its authentication (which has proved impossible to crack to date) and pissing off all of its license owners (us) is not how to do that.

[Kategra]

I'm worried a little by this also. I have an USB dongle that I update from time to time. I've done so many OS installs, and I had to reinstall the REs every time, there is no separate installer for REs that I can download from my account and keep it back-up on my PC and in the cloud.

I wonder what will happen if I reisntall the OS, I don't have an working internet connection and the version of the REs on the USB dongle Authoriser are different then the let's say the REs which I manually backed up?

Also, I don't know if they have geographically redundant servers or not.. with this new age of terrorism in Sweden we could be locked out in one blow if they have the authorized servers in the same data center.

This subject makes me uneasy every time...

[EnochLight]

I'm worried a little by this also. I have an USB dongle that I update from time to time. I've done so many OS installs, and I had to reinstall the REs every time, there is no separate installer for REs that I can download from my account and keep it back-up on my PC and in the cloud.

I wonder what will happen if I reisntall the OS, I don't have an working internet connection and the version of the REs on the USB dongle Authoriser are different then the let's say the REs which I manually backed up?

Also, I don't know if they have geographically redundant servers or not.. with this new age of terrorism in Sweden we could be locked out in one blow if they have the authorized servers in the same data center.

This subject makes me uneasy every time...

Well, a VC group becoming a majority shareholder in the company doesn't change this. If anything, they now have more money at their disposal to create redundant servers, etc.

[QVprod]

I'm worried a little by this also. I have an USB dongle that I update from time to time. I've done so many OS installs, and I had to reinstall the REs every time, there is no separate installer for REs that I can download from my account and keep it back-up on my PC and in the cloud.

I wonder what will happen if I reisntall the OS, I don't have an working internet connection and the version of the REs on the USB dongle Authoriser are different then the let's say the REs which I manually backed up?

Also, I don't know if they have geographically redundant servers or not.. with this new age of terrorism in Sweden we could be locked out in one blow if they have the authorized servers in the same data center.

This subject makes me uneasy every time...

Well, a VC group becoming a majority shareholder in the company doesn't change this. If anything, they now have more money at their disposal to create redundant servers, etc.

I'm beginning to think people just have no clue about how investments work. Otherwise there would be no reason for concern.

[ltbrunt00]

I think we will get a new product launch from PH that will make the forums kneel down in Awe soon. It will expand time and cause the nucleus of atoms to explode......Just saying it will be Awesome. No other forums are like the PH dedicated ones.