Promising music video monetization startup Vadio have lost the wind in their sails, crashed and died with millions in funding lost down the drain.
Portland-based startup Vadio have had to give up after four years of monetizing music videos as the company runs out of money. Unfortunately for investors that adds up to almost $12 million that the company has gained and lost before facing facts and throwing in the towel.
Across 6 rounds of funding the company raised $11.8 million including a massive $8 million round which was led by Marker LLC. The company also controversially took out a $1 million convertible loan last September as the company was on it’s descent. It may have been a last ditch attempt to save Vadio but it ended as a waste of money.
Vadio’s CEO Bryce Clemmer said they failed because they didn’t have enough money, saying: “We didn’t raise enough money out of the gate. The economics are somewhat unique to the music business, which requires quite a bit of upfront investment to secure the rights from the labels globally.” To be fair to Vadio upfront licensing costs have caused the downfall of many music-based startups, even leaders in the market like Spotify struggle to keep up with upfront payments.
Although it might not be a surprise inside the company, to most people on the outside Vadio seemed like it was a success. Signing deals with Warner Music and a partnership with Shazam it looked like the music video service was on to big things before the news this week that the company has run out of money.
According to Digital Music News Vadio’s model was “completely unsustainable” and major labels were reportedly trying to “bleed this company while it lasted”. According to Clemmer both Universal and Sony were demanding impossibly high amounts for licensing which they couldn’t get from investors. Clemmer said: “The fundraising climate has changed and it takes more investment than many VCs are comfortable with today.”
As Vadio joins the list of failed music startups, investors are becoming more and more cautious with the industry, with many investors now refusing to get involved with music-based startups thanks to the expensive licensing costs. According to various publications Vadio are now getting rid of staff as they sell their remaining assets.