Venture Capital Expands Music Company

Reverb Holdings, Inc. is an online marketplace for musicians. On this website, musicians have the ability to buy and sell their gear and instruments. The company was begun by David Kalt, who co-founded OptionsXpress Holdings Inc. before he became interested in selling musical instruments. In the year 2012, he launched reverb.com.

Kalt initially put his own money into the company; he did not want to ask for crowdfunding support straightaway. He began the company simply as a way to help musicians find used equipment that was less expensive than it was on Ebay. He owns the Lakeview Guitar Shop Chicago Music exchange, so he has had to learn a lot about a musician’s struggle when it comes to purchasing instruments.

When Kalt decided he wanted backing for reverb.com, he was not expecting a large sum of money. He reached out to a few friends that he knew from his time in the music business and from college. He ended up being funded 2.3 million dollars. His initial investors included Rick Nielsen, from the band Cheap Trick, and Brad Keywell and Eric Lefkofsky of Lightbank. The website grew to have over 50,000 users of both buyers and sellers, many of whom are musicians that respect the instruments and the process.

Fast forward to present day, in which reverb.com has raised over 25 million dollars in venture capital funding, a fund that was led by Summit Partners. This money is all being funneled into the Reverb online marketplace. The company has grown significantly since it first appeared online, and has even launched a new online program called Reverb Lessons in which music instructors can find students online, and vice versa.

It is a constant conundrum how any e-commerce platform, no matter the niche, can withstand competition against e-commerce websites such as Ebay or Craigslist. After all, these e-commerce platforms sell any number of things and are constantly expanding. However, Kalt is doing something smart to distinguish reverb.com from these other websites. Instead of just listing the instruments online, he makes sellers list an instrument’s history, post up video demonstrations, and he also includes an instrument pricing guide. Kalt makes sure not to hide anything from the buyers on his website, and I think that is why he is coming out on top.

Venture capital has done a lot to expand this musical e-commerce website, and it will be interesting to see what Kalt thinks of next.

To read more about how reverb.com has expanded, check out this article in the Wall Street Journal.