Venture capitalist and former music startup founder David Pakman has compiled some grim statistics on the survival rate of VC-backed music services. “Since 1997, according to PitchBook, approximately 175 digital music companies were created and funded by venture investors. Of those, approximately 33 were acquired by larger companies, often for less money than their investors put in,” he writes in a blog post on Medium, taken in part from testimony he gave last year before the Copyright Royalty Board. “Of those who have exited, I believe only seven achieved meaningful venture returns for their investors by returning more than $25 million in profit to their investors (Last.FM, Spinner, MP3.com, Gracenote, Thumbplay, Pandora and possibly The Echo Nest), representing an investor success rate of only approximately 4%, far below that of other internet and technology market segments.
