German venture capitalist bets on Spotify

Klaus Hommels of Benchmark VC adds to his Internet portfolio

COLOGNE, Germany -- Klaus Hommels, of German venture capital group Benchmark VC, has taken a minority stake in Swedish Internet music service Spotify, the company confirmed Monday.

Hommels, a pioneer investor in Internet start-ups including Skype and Facebook, has also joined Spotify's board of directors. Neither side would comment on the size of Hommels' investment or his exact stake in the company.

Spotify said Hommels bought into the company during the most recent investment round. The Swedish service, which offers users millions of tracks to stream online, has reportedly raised between $30 million - $50 million from a pool of high-profile investors including the charitable foundation of Hong Kong billionaire Li Ka-shing and British venture capital firm Wellington Partners.

Spotify has floated the idea of an IPO to finance further expansion.

According to its own figures, the music service currently has some 5 million members across Europe and is growing at the rate of 30,000 new users a day. But at a recent talk in London, CEO Daniel Ek acknowledged that less than 10% of Spotify users opt for the premium -- aka paid -- version of the service, with the vast majority streaming for free.