Calling all investors; Dr Dre is looking for a new homie

Dr Dre is seeking new investors for his headphone brand Beats, will financiers bite or will his high rollin' lifestyle put them off?

by Gabriella Griffith
Last Updated: 06 Nov 2014

Beats Electronics, the headphone maker founded by Dr Dre and music mogul Jimmy Iovine, is on the hunt for some new investors. It is hoping to raise the cash needed to buy out its minority stakeholder HTC, which owns 25% of the business.
 
Smartphone maker HTC took a 50% stake in Beats back in 2011 for a whopping $309m, reportedly tripling Dr Dre’s net worth overnight. But Beats bought 25% back a year later for half the price and now it wants to buy the rest of it, as HTC is no longer flavour of the month.
 
Now, the headphone maker is eager to expand the business into speakers, car audio systems and an internet streaming system and wants to finance its ambitions, taking HTC (whose profits have spiralled down 83% in the second quarter of 2013) out of the picture in the process.

Since its launch in 2010, Beats has performed incredibly well, with revenues growing from $200m in 2010 to nearly $1bn last year. Surely any investor would want a slice of that? Well, maybe not. It’s not the first time the rapper and his business partner have tried to raise the cash needed to pay-off the Taiwanese smartphone maker.
 
The pair went on a roadshow in June to raise $700m but investors weren’t interested (despite the free headphones given out to potential investors). According to reports, potential backers were frightened off by the faddish nature of the headphones and the founders’ desires to pay themselves bumper dividends.

Now that the markets have picked up, Dr Dre is off, cap in hand to investors once more. Let's hope they’re more receptive to his advances this time (they won't forget about Dre).

Dr Dre is by no means the first rapper to dip his toe into the business pool. Quite a few of his peers have given it a go.

1.    Diddy

The artist formerly known as P Diddy, formerly known as Puff Daddy, formerly known as Sean Coombs, splintered from his rapping career back in 1998 when he launched his clothing range Sean John. The line went on to win several awards and helped him to build a $580m fortune.

2.    50 Cent

Eager to increase the number of 50 cents in his coffers, the ‘In Da Club’ rapper invested in, and became the face of, Vitamin Water. His reputation may have taken a battering, as people took the mick out of his campaigns, but when the drinks maker was bought out by Glaceau, it earned him $200m.

3.    Jay-Z

Beyonce’s squeeze Jay-Z also has his own fashion line called Rocawear. He founded the company in 1999 and sold the brand in 2007 for an eye-watering $204m.

These rappers have certainly earned the right to sing about their millions but some of their peers don’t quite have the moolah to back up their bolshy, cash-splashed lyrics.


Want more rappers' delight? Check out this nifty graph from Bloomberg Business Week (or click on the link for the full bells-and-whistles interactive version):

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