It’s by no means a boring week at Utopia Music.

A couple of days in the past, the Switzerland-headquartered music agency confirmed that it was shedding round 15% of its world workforce, totaling round 100 jobs.

That information arrived lower than six months after a earlier spherical of layoffs on the firm in November, which noticed 20% of its headcount – or round 230 positions – axed.

Now, the corporate is aiming to lift EUR €65 million ($72m) by way of a brand new shareholder possibility program. 

That’s in keeping with a letter issued to Utopia shareholders on Friday (April 21), obtained by MBW. The corporate says that the brand new capital would fund its operations till it turns into worthwhile, which it initiatives to be in June 2024.

In complete, Utopia says it’s seeking to increase €83 million ($91m) from this new spherical of exercise.

That features the €65 million in new share choices, plus “as much as a complete of €25 million” that has already been dedicated by Utopia’s “three largest shareholders by means of conversions of their shareholder loans and convertibles”.

(This €25m determine, says the agency, might scale back relying on how shut it will get, by way of the €65m supply, to elevating €83m in complete.)

Present shareholders are being given one possibility for each 4 shares they already personal. Shareholders can then select to transform these choices into shares, for €10 per share, earlier than the supply expires on Might 5.

In keeping with paperwork seen by MBW, Utopia plans, by way of the choices program, to dilute its present share construction (33.11 million shares) with a most of 7.5 million new shares.

Within the letter, Utopia founder and Govt Chairman, Mattias Hjelmsted, revealed that Utopia’s annual web revenues in 2022 stood at €24 million on an adjusted professional forma foundation (i.e. omitting the turnover of just lately offered property equivalent to Sentric).

Utopia, wrote Hjelmsted, is concentrating on €41 million in web revenues in 2023, representing development of 71% year-on-year.

“On the identical time, we’re enhancing our margins by means of scalable tech merchandise, which might be an necessary side in our profitability journey,” he stated.

Hjelmsted advised shareholders that in recent times, Utopia has “deployed a ‘hyper development’ scaling technique supposed to utilize the then profitable market that strongly rewarded development, with out deal with speedy profitability”.

He added that this technique “was extremely depending on new investments fuelling that development” and claimed additional that, “midway by means of that course of, the world modified dramatically and the funding atmosphere turned very delicate to growth-focused (and not-yet-profitable) corporations like Utopia”.

Continued Hjelmsted: “Whereas many corporations continued to hope for the world to show higher, we made some robust selections, and we tailored.”

“We’re at present holding an inside fundraising spherical that displays the assist of our current shareholders and can assist additional propel the corporate in direction of profitability.”

Utopia, in an announcement to MBW

MBW reached out to Utopia right now (April 24) for a remark in regards to the plans to lift new capital by way of the brand new choices program.

A spokesperson advised us: “Utopia has beforehand raised a number of profitable financing rounds and we’re grateful to have a robust shareholder base that’s dedicated to the corporate and to its future.

“We’re at present holding an inside fundraising spherical that displays the assist of our current shareholders and can assist additional propel the corporate in direction of profitability.”

Utopia’s so-called “hyper-growth scaling technique” noticed the corporate go on a hiring and acquisition spree in 2021 and the start of 2022.

Amongst the businesses it purchased throughout that point had been Nashville-based monetary providers firm, Lyric Monetary and  Quincy Jones-backed emotional knowledge enrichment firm Musimap.

It additionally purchased UK warehouse, success, and distribution agency Cinram Novum; UK-based bodily and digital music distributor Correct Music Group; and Absolute Label Providers, one other UK-based distribution and providers supplier for unbiased artists and document labels.

In December 2021 it acquired US-based music trade listing ROSTR and Austria-based music knowledge analytics platform, ForTunes. In February final yr, Utopia acquired Liverpool-based music writer and publishing administration firm Sentric Music Group.

These latter two corporations have since been divested by Utopia.

Imagine purchased Sentric from Utopia final month, only a yr after Utopia itself acquired the agency, whereas Utopia offered music trade listing and knowledge platform, ROSTR, again to its founders in February.

In the meantime, Utopia is reportedly being sued by US music know-how firm SourceAudio, which is accusing Utopia of reneging on an agreed acquisition deal.

Commenting on the post-Sentric and ROSTR period at Utopia, Hjelmsted advised shareholders on Friday that “Utopia’s new, extra centered technique will middle on the core of Utopia, specifically the Utopia Platform”.

He added: “Going ahead, Utopia will deal with scalable high-margin merchandise that drive income and maximize shareholder worth – the best way we all the time supposed.”

Commenting on the current layoffs, he wrote: “We now have decreased prices by means of two rounds of needed rightsizing (20% in Nov. 2022 and a further 15% in Apr. 2023), and we are actually on a path in direction of profitability and sustainable development.

“Merely put: stronger income streams at a decrease price. To additional strengthen our firm, we made adjustments to our administration group earlier this yr to have individuals with extra expertise commercializing merchandise and constructing relationships with the trade.”

Excessive-level exec departures at Utopia this yr included the exit of the agency’s long-time CEO, Markku Mäkeläinen, who left as a part of a administration shakeup in January, which noticed Hjelmstedt assume duty for the day-to-day working of the corporate.

Following the information of Sentric’s acquisition by Imagine, we realized that former Downtown govt Roberto Neri, who joined Utopia as its COO in 2021, and was named as the brand new CEO of Utopia’s ‘Music Providers’ division in January, has left Utopia to grow to be CEO of the worldwide publishing division of Imagine.

Hjelmstedt advised shareholders within the letter final week that “in keeping with the monetary forecast set by the brand new administration group, we now want some further funds earlier than we attain profitability”.

“We now have the merchandise, we’ve got the gross sales pipeline, and we’ve got the group. We now have, the truth is, executed the vast majority of the work essential to take us to profitability. We now simply want the required funding to see this plan by means of.”

He added: “Earlier than turning to exterior traders we’ve got determined to provide you, our shareholders, free short-term choices that may be transformed to shares on the worth of €10 per share (valued at €50 within the pre-C spherical).

“By this strategy, you get to profit from the exhausting work we’ve executed in these previous months and scale back the chance related to making an attempt to lift funds by means of a priced spherical in an unstable market.”

Amongst Utopia’s merchandise are its Observe’n’Declare software, which Hjelmstedt defined within the letter “identifies missed income alternatives on YouTube“.

Utopia’s Improve software, in the meantime, goals to “assist enhance music knowledge”, wrote Hjelmstedt, including that “on the core of every little thing, we’ve got the Utopia Platform – a novel knowledge software that collects knowledge, types knowledge, and pays royalties”.

He claims within the letter that “By our distribution corporations we already signify 97% of all UK labels, together with all of the majors.”

“With the continued assist of our shareholders, we will strongly place Utopia to take the corporate into profitability and proceed scaling as much as convey most shareholder worth.”

Matias Hjelmstedt

Added Hjelmstedt within the shareholder letter: “With the continued assist of our shareholders, we will strongly place Utopia to take the corporate into profitability and proceed scaling as much as convey most shareholder worth.

“It’s Utopia’s board of administrators’ robust perception that this increase, this chance, must be awarded to our shareholders who already consider in Utopia.

“I hope that you just all see this for the chance that it’s and hope in your continued assist by means of this selection program in order that we will deal with bringing nice worth to you, our shareholders, sooner or later.”

This information follows a report from information outlet Breakit final month, which revealed that Utopia’s Swedish firm is carrying a considerable unpaid tax debt, as staff within the area claimed their pension premiums (and in a single case, even their wage) have gone unpaid.

MBW requested Utopia for a remark in regards to the scenario with its firm and staff in Sweden on the time.

A spokesperson advised us on March 30: “Utopia has grown extraordinarily quick in two years. Our Swedish entity alone grew 5x in staff, which is one out of a number of of our improvement workplaces.

“We dealt with greater than €300 million final yr, and proceed to develop very quick. Now we’re adapting our group to market shifts to make sure that we will proceed to evolve our enterprise in a sustainable method.

“All funds talked about within the submit have already been recognized and are being resolved. We now have arrange processes and buildings to make sure that this received’t occur once more.”Music Enterprise Worldwide