Jay Z is launching a new venture capital fund with the help of his longtime business partner and president of Roc Nation, Jay Brown. The duo are expected to focus on seed-stage funding of technology startups. The news has been touted as a natural progression from their current roles as angel investors in some of the most successful startups of the last 5 years, including a savvy early investment in Travis Kalanick’s Uber.
One of Jay Z’s most high profile investments has also turned out to be his most controversial. Back in early 2015, the mogul purchased Swedish holding company Aspire AB, which was the parent company of a fledgling music service called Tidal. The deal was worth a reported $56 million. According to the Wall Street Journal, Aspire AB recorded a net loss of about $28 million in the year that Jay Z took control of the service, and underwhelming press coverage has led many spectators to question the success of the artist’s Tidal investment. Jay Z was vindicated recently however, after Sprint recently agreed to acquire 3% of Tidal for about $200 million. Still, Tidal is yet to genuinely compete with its major rivals such as Spotify. Spotify has already topped over 40 million paying subscribers, compared to Tidal’s 3 million.
Tidal was not Jay Z’s first bold financial move. Back in 2011, Roc Nation invested in Stance, a ‘premium sock company’. The company has since raised $116 million, which makes it a sweet deal for the mogul. As sweet as it was, it was a deal that is dwarfed by the success of his 2011 Series B funding round of Uber, when the company was valued at $300 million. The company has since risen in value to $66 billion.
With his new Venture Capital firm, he joins the ranks of other celebrities who are investing their money in technology. LeBron James was an early investor in Beats, reportedly making a solid $30 million when Apple purchased the headphone company for $3 billion. Shaquille O’Neal was a pre-IPO investor in Google. In June 1999, he was part of a $25 million Series A round including Arnold Schwarzenegger, Henry Kissinger and Tiger Woods. At the time Google (Alphabet) was worth $75 million. It is now worth over $585 billion. Unlike many celebrities, O’Neal is typically tight lipped about his investments. Speaking about his strategy back in 2012, he said “One day I was riding through a neighbourhood looking at all the huge houses, and I asked what the people who lived there did for a living … they owned businesses and they didn’t brag about what they did. I realised the business should be important, not just the name behind it.”