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Acast raises $35 million in Series C funding

The money will apparently fund expansion into new content and territories, a push towards more non-advertising revenue streams, and an improved offering for smart speakers.

Acast, the Swedish podcast hosting company that launched in 2014, has announced that it has raised $35 million in Series C funding. This brings the company’s total funding to $67 million, with one of the principal investors in this round being AP1, a fund which manages part of the capital in Sweden’s national income pension scheme. This is also Acast’s second fundraising round in two years: they raised $19.5 million in Series B last September.

Alongside the new funding, Acast also announced some growth figures, quoting an 86 percent increase in revenue, with an 137 percent rise in the UK. The number of shows they work with has also risen rapidly they say, up 97 percent on 2017 to 3,300 podcasts globally. The new investment is a “huge vote of confidence,” or so says the press release.

I caught up with Ross Adams, a former Spotify exec and now Acast’s CEO, on the phone earlier this week to dig into these numbers a bit more. In particular, I was interested to know why the UK has proved a particularly fertile hunting ground. ““The market for advertising [in the UK] didn’t really exist for podcasting four years ago, so we were essentially set the rules and educated the market,” he said. “I think it is just timing. Podcasting as a whole globally is really bubbling now and the market is finally properly listening and exponentially investing into it.”

This certainly fits with my own observations of the way the monetisation space in the UK has evolved. There are really no sizeable podcast networks or digital audio-only companies here producing content at anything like the scale of a Gimlet (VC funded model) or Radiotopia (non profit). There are also far fewer marketplace and dynamic ad injection companies, so if you’re making a podcast independently or for another kind of publisher — a magazine or a radio station, say — you’ve really got very little choice about who to monetise with.

Adams puts a positive spin on this, of course. “In UK especially I believe we’re seen as the content creators platform of choice. We seem to find about the new shows coming out before anywhere else, and we are recommended by a lot of podcasters,” he said “Publisher-wise, we represent everyone from the BBC [Acast monetises non-UK listens for the corporation], the FT, the Guardian and all of the big publishers. In terms of independents it’s everyone from Adam Buxton through to Scroobius Pip and Football Ramble. Word gets out quickly — people talk about who they were working with, and word of mouth has been especially kind to us.”

In the UK, it’s certainly true that Audioboom and Acast have really carved up the space between them, although the former suffered something of a set back when a $185 million reverse takeover of the California-based Triton Digital was withdrawn back in May due to lack of raised funds. Although I’ve been assured by people there that they are on a firm financial footing now with a strategic plan to grow their listener base underway, their reputation as a safe bet for podcasters keen to monetise has probably taken a bit of a knock. I’ve written a lot before about the peculiarities of the UK market, and this is one of the biggest. Especially from the podcaster’s point of view, there isn’t a lot of choice and therefore negotiating room when it comes to monetisation deals. Unless your show is big enough to attract US support, Acast is one of very few choices you have left.

This new funding round for Acast will support a two-year plan, Adams said, in three core areas: expansion into new content and territories, a push towards more non-advertising revenue streams (he cited the popularity of the Chinese subscription model, which I wrote about here), and an improved offering for smart speakers. On the latter, he said: “We’re seeing everyone focusing on smart speaker first strategies and advertisers are openly talking about the fact they want to hit smart speaker owners. We have a huge amount of data and content that’s focused on that area, so we see that as a massive growth opportunity for us.”

Although Acast does operate in the US — they have three offices there and it’s “half the area of our focus” — it’s not their whole business. Part of that has to do with the fact that the US market is so much more mature, and therefore there’s less space for new players of Acast’s size, and partly, Adams said. “It’s a very content mature market, but technology adoption has been a lot slower than we would have thought,” he said, referring to the lingering preference among some podcasters and publishers for baked in host reads as opposed to dynamically inserted ads.

Europe, especially non-English language markets like France, Germany and Spain are where Acast will be looking to expand in the next two years, Adams said. ”Growing our content base is really key, and growing that scale and reach for advertisers,” he said. Again, they’ll be looking for the kind of “first mover advantage” they’ve enjoyed in the UK in order to shape these markets according to their own plans once more.

Three notes from Nick Quah:

  • One should further contextualize the Series C news against this October 2017 report from the Swedish publication Di Digital, which noted that Acast, at the time, was aiming to go public on the Swedish Stock Exchange at some point. This could still be the case.
  • Fun historical note: back when Acast first made its (loud, buzzy) push into the US some years ago, the company hired former WNYC exec Sarah van Mosel as its Chief Commercial Officer. Van Mosel is now the Chief Podcast Sales and Strategy Officer for Market Enginuity, which handles advertising for PRX. Nothing pertinent to this story, just a fun recall.
  • In various discussions about alternate non-advertising business models (including and beyond this story), I’ve been seeing a lot of references to the podcast market in China. Caroline has written about that before, but I think we’re going to explore that a little more in the new year. Personally: I have a gut feeling that some folks are pointing towards that model too liberally as a thing that can be replicated here in the States/West.