Kasper:
Welcome to Balentic Edge, conversations that matter in private markets. I’m your host Kasper, investor, entrepreneur and founder of Balentic. On this show, we explore the people’s strategies and ideas shaping private markets today, from GPs building tomorrow’s funds to LPs allocating in a shifting landscape. This episode is brought to you by Orca, an AI-driven compliant platform connecting the right GPs with the right LPs, smarter matches, faster decisions and better outcomes.

Kasper:
On this episode, I sit down with Natalia Fontecha partner and head of capital raising at PopHouse Entertainment, the firm reimagining music as an asset class. We dig into what it means to apply a private equity model to music ownership, how artist centric investing turns catalogues into scalable evergreen businesses, why LPs are backing this new uncorrelated asset class, even in a tough market, and how PopHouse built one of Europe’s largest first time funds. From ABBA and Avicii to AI and music and the future of legacy investing, this is one of the most fascinating intersections of creativity and capital I have seen yet.

Kasper:
Welcome Natalia.

Natalia:
Thank you, Kasper. It’s a pleasure to be here today.

Kasper:
Fantastic that we could get you to join. You have built your career at the intersection of finance and creativity from Onex and Stepstone to now leading capital raising at Pophouse. What drew you into this unconventional corner of private markets?

Natalia:
Well, for those who know me well, they know that I’m very passionate about music. I come from a musical family. I perform. I love music. And it was just a great opportunity that came almost as a dream come true where I could combine my professional experience with my personal passion. So I couldn’t say no. And here I am.

Kasper:
Okay, I have to ask as a follow-up, how does this work now, your professional experience and your passion?

Natalia:
It’s interesting because right now I speak about music all the time. It’s all I do. And I get to participate in pitches with some of the artists and I get to meet artists and I go to concerts to evaluate opportunities and I take our investors to also musical opportunities. So I continue to be integrating music into my life even more than I did before. So it’s very joyful. and it’s working really well for me.

Kasper:
Not all of our listeners will be familiar with PopHouse yet. How would you describe what it is that you do?

Natalia:
Pophouse is a global pioneering Swedish company that was founded by Conni Jonsson, who’s the founder and chairman of EQT and Björn Ulvaeus, who is one of the members of the super group ABBA. And they came together and basically they realized that they have this unique combination of talents and… What we do is exactly that. We combine the worlds of music with the world of investments. We partner with artists and we provide investors access to the lifetime opportunity of what is now the new frontier between entertainment content and music rights. So we invest in music to just bring attractive returns and enhance the catalogues or the… legacies of the artists that we invest with.

Kasper:
The investment thesis behind music as an asset class, is it fair even to describe it as an asset class? Where do you play within the larger music ecosystem?

Natalia:
We are creating what we believe is an asset class, that it’s a different asset class. Investing in music has been actually around for a while. We are the first ones to do it in a very specific and different way, which is applying a private equity model to it. But the reality is that investing in music has been around for a while, and there are a lot of different funds that invest in music. We just do it… in the way that it’s the value add traditional private equity strategy. We buy catalogues that we consider to be companies and we apply a value creation plan to these catalogues or companies and we enhance their value and we sell them at the end of the holding period. And that’s basically what we do. It’s a very unique combination of investing in music. The global streaming market is growing. So that’s very interesting. And it’s a very uncorrelated asset class. So it’s applying a tested and proven model into a different underlying asset. But it’s as simple as investing in private equity. 

Kasper:
I have a number of other questions on this, but I have to ask: You are literally buying trophy assets, no doubt about it, because that’s how great artists work, right? And yet you say you’re going to sell them. Would we not expect that you guys actually have a real rationale for this is a trophy asset and we really should hang on to them?

Natalia:
Yeah, and we might. One of the key questions we get asked all the time is how do you exit an asset like this? The exits are the traditional exits in the private equity world as well. We can sell to a strategic and strategic in this context are usually music labels or we can sell to another financial buyer. As I mentioned, there is plenty of other funds and GPs that are now entering the space or If it’s a trophy asset, that it’s a fantastic yielding asset and we want to hold on to it, then we can keep it and we can create maybe an evergreen vehicle with this asset that will be joined by others. So it’s one of the possibilities. Of course, if we’ve done great work on one of the assets, we might want to keep it.

Kasper:
Keep an eye out for that because here at least I for one would not be arguing that this is not a trophy asset, which I tend to do in all other cases just sell it, be done with it. Natalia, with Pophouse, you raised what I believe is the largest first time fund in the Nordics ever. You raised it from high quality blue chip LPs, including some of the largest and most prominent ones worldwide. And you did it in probably the hardest fundraising environment. ever. What’s your secret?

Natalia:
Yeah. A lot of work, resilience, lots of traveling. I racked up a serious amount of miles. Jokes apart, there is no real secret. For all of us who have been in this business long enough, you know that the secret to a successful fundraise is to have a very unique investment proposition. And to do the work that you need to do with the investors, which is to educate them, illuminate the opportunity, share your conviction and the data that you have, and trust that they will make the best decision for themselves. We can only say who we are and how we operate. Obviously, we initiate the conversations. We answer the hard questions. And then, you know, since you were an LP that there is no convincing of LPs. We’re not in the business of persuading people. We can just sit with them, make sure that our interests are aligned and you know that the most sophisticated capital, what they want is transparency and access and insights. And that’s what we did. We went to investors, we educated them in the asset class. And we provided a very unique and differentiated opportunity that fit well in their portfolios. that’s the secret,

Kasper:
Following on on that, what was the best LP moment while you were on the road and what was the worst LP moment no mentioning of names

Natalia:
There’s been a few really best LP moments because as I mentioned, one of the things that I really enjoy about this particular opportunity is that you are in a meeting and everyone’s smiling and it’s a happy subject and everybody likes music. But the best LP moment was in the summer of 2024, we held our first AGM in Ibiza. And that was a fantastic moment. We took the investors to see live performance of one of our assets, the Swedish House Mafia. And it was incredible to be there and see people happy, dancing and enjoying. That was really, really very, very, very good moment that I will cherish and keep forever in my heart. Probably the worst moments in this particular fundraise have been when investors have told us that they love us and that they really believe in what we’re doing, but they don’t have an allocation or they don’t know if they can invest with us yet.

Kasper:
So that’s the usual problem we have, first time fund, which bucket does it go into? How do I wrap my arms around this? Music, as you said, as an investment asset class has really exploded in recent years. But Pophouse I think in particular, has positioned itself very differently. as a value creator and not just as owning the rights.

Natalia:
So much.

Kasper:
Where is your edge in this artistic or artist-centric private equity model? And what is it that you have seen that you think others have actually missed?

Natalia:
We have one of our co-founders who’s a brilliant entrepreneur and a well-recognized artist. And if you look at the work that he, together with others, did for the ABBA catalogue, you can see that it’s a model that works. And that’s actually what we’re doing. We’re bringing that model into other catalogues. So having that artist-centric approach, creating a structure that has the right talent that can speak to the artists, that can develop and create these concepts. It’s different from what others have been doing. And it’s one of the things that attracts the artists to come and work with us because we’re not only offering them a fair value for their life work for their catalogue, but we’re actually taking care of their legacy. We’re actually making them immortal and we’re developing their catalogue into new horizons, unlocking new audiences and that it’s very unique to our setup and I think that’s probably what makes us different and what makes investors and artists alike partner with us.

Kasper:
Can you briefly walk us through how this would actually work by way of an example?

Natalia:
Yes, so we will be talking to an artist and we will obviously be having a conversation around the value of their catalogue, but then we will be having a conversation about what we can do with their catalogue? What is their story to tell here? And together with the artist or with the legacy of the artist, if the artist is no longer with us, we will work out a plan as to what it is that we will be doing with his music or her music. It could be a documentary, a TV series, a biopic, an immersive experience, a museum, or ultimately an avatar show, which is one of the things that makes a lot of our potential artists very interested because it’s the ultimate way to perform and be immortal forever. And we bring the artist… into the project, so we involve them and we bring in the people that can speak to them. It’s not just people in suits, it’s real creative talent that can speak the artist’s language.

Kasper:
I think your model probably wouldn’t work with too many people in suits.

Natalia:
Yeah, it will not create the magic, let’s put it that way.

Kasper:
So diving a little bit more into this, how do you then identify and acquire catalogues like you’ve got Avicii, you’ve got Kiss, you have Swedish House Mafia, and I believe also Cyndi Lauper.

Natalia:
Yes, we have a very traditional funnel of investments. So we have a number of criteria and we narrow down what’s the universe of opportunity within very specific quantitative data driven characteristics. And then once we have that little narrow pool where we can fish, we look into the overlaying of the storytelling. We look at the the stories that we can tell and that’s how we select who we want to go after. It has to be, iconic quality or quality that we can take to be iconic through the work that we will do with the brand and the music. It has to be a global appeal. It has to be diverse enough. We need to have stories to tell. And this is where the creative part comes when Björn and the team have a… have an important say into how we create value creation plans for the artists.

Kasper:
You have a musical background, Natalia. If you could pick any band in the entire world, alive or dead, who would you pick?

Natalia:
That’s a very difficult question. I mean, obviously I love ABBA. I grew up with ABBA. It was one of reasons why I joined the company. So if it’s a band, it will have to be ABBA.

Kasper:
Staying on Abba for a moment, because that is quite iconic. I think that’s where it all kicked off for PopHouse, the blending of the brand storytelling, the immersive tech, the commercial execution. At what point does PopHouse realize that this is a scalable investment model and not just another show

Natalia:
This was something that Conni and Björn realized together. If you think about the origins of Pophouse actually they met over a real steel deal in 2014, but it was in about 2019 that they realized that there was more that they could do. That’s when they started thinking about maybe we could create a strategy. That’s how everything… started. So, yeah, about five years ago, I would say.

Kasper:
What’s the overlap between Björn and Conni? Is Björn secretly a financial dude or did Conni really want to be a musician and just didn’t carry a tune?

Natalia:
Well, Björn is an entrepreneur. If you think about what Björn has done since he stopped playing for ABBA, he created Mamma Mia, the musical, and then Mamma Mia, the movies. So he’s an entrepreneur. There’s also Mamma Mia, the party So Björn is an entrepreneur. And Conni loves music. It’s just a very unique combination and they’re very charming and fascinating to work with and they have a very synergetic way of interacting. It’s really an honor and a pleasure and they work along together so well. It sounds like they were made for each other.

Kasper:
So tell us this, Natalia, and I promise we won’t tell anyone except our audience. Does Björn understand all our abbreviations, MOIC, TVPI, IRR and can Conni carry a tune, and does he play an instrument?

Natalia:
Yes, yes, the answer is yes. I will not reveal which instrument there is. I’m asking the question. No, and yes, Björn understands and Conni can sing. ⁓

Kasper:
Is it the kazoo? Fantastic. I love the combination. Who would ever have thought of it? Staying on the team. So the team blends private equity. There’s some Spotify in there and there’s music industry DNA. And again, it’s just so different from everything else out there. Your board includes both Björn and Conni. So how does this diversity shape the decisions and work in practice?

Natalia:
I mean, it’s part of our secret sauce is the fact that we have different perspectives and we can think about our decisions from different angles. It actually works really well. Different dynamics, probably. I think conversations are very animated and typically joyful. But in practice, it’s just like any other business. It’s just people bringing in their expertise and people being open to different perspectives.

Kasper:
People are more passionate about music. So they’re making decisions probably a little bit more with their heart and less with their head than we’re used to. So what does that do to the dynamics?

Natalia:
Mmm. Well, but this is where the combination is very unique, right? So we are very disciplined. We know exactly what we have to do with the capital that investors have trusted us with. And there is no drifting away from that. And Conni is one of the key members of the investment advisor committee. There are others as well. then Björn and others bring the artistic side of it. So it really blends very well. And we take into consideration artistic objectives, artistic nuances, once we have a very disciplined investment thesis that it’s aligned with the returns that we have promised to invest as we’re going to deliver.

Kasper:
What do LPs actually think about this space? And do you see it becoming sort of more institutionally mainstream?

Natalia:
Well, mean, it’s definitely institutional if you look at the quality of the investors that we have attracted into our first fund. And predominantly investors have come through their private equity buckets. But we have investors that have looked through the lens of an opportunistic approach, diversifying approach. It really depends on how sophisticated the investors are and the different mandates or buckets they have. But if you think about it, you can even come through a sustainability lens, because it’s a very sustainable way of investing, it’s a very responsible way of investing. So there is a very large variety of buckets where you can put our investment proposition in and that’s part of the attraction. to the investors,

Kasper:
You’ve acquired some really recognizable global music brands. What’s next for Pophouse? Is it different genres? Is it new formats, different avatars, different immersive experiences?

Natalia:
One of the reasons why investors trusted us with their capital is because we are the forefront of innovation and we are very hard working on that. We will continue to acquire high quality IP and develop new concepts, new productions to enhance the value of this quality IP. So I can’t reveal exactly what it is now, but it’s going to be a continued stream of new concepts so that people can experience music and we can unlock new audiences and enhance the value of our assets. It’s going to come from more innovation.

Kasper:
Well, in this case, we will be keeping an eye on it. And here it is literally stay tuned, right? If we then look at the other side, what are the risks of investing into music IPs?

Natalia:
Stay tuned! We believe it’s an asset class that is here to stay because of the very specific qualities it has. It’s predictable, it’s consistent, it’s steady. Of course, it has its risks as any investments. We do believe that the risks are quite mitigated because even in the case that an artist is cancelled, for example, which is one of the reasons why we could not be able to… maybe apply our value creation plan. We have data that proves that even in that case, the streams of the artists do not completely die off. So they might stagnate or maybe have a little bit of a dip, but there is no such thing as a pure write-off as it will be in another company. When it comes to people moving away from the streaming platforms, well, we own the IP. So the way people consume music, it’s almost irrelevant because we own the IP. So we will always be the owners of the royalties. And then… When it comes to AI, obviously we’ve had this question a lot while we were fundraising and Björn is a very active proponent of working with AI. We see AI as a tool, we see AI as something that will come and help, but it’s not going to really cannibalise the kind of music that we play in. And there is also data that demonstrates that the… music that we invest in, which is catalogue music, is one of the highest growing genres or styles in the public now. Maybe there’s a lot of nostalgia, but it’s the music that is growing very, very fast. I was on holiday this summer with my niece, who’s 19, and she was listening to ABBA. And this is the kind of thing that we do. We bring artists that have been really iconic to new generations that have never heard of them.

Kasper:
I think you also have the advantage that your artists are never going to walk off the stage and here I’m specifically thinking of Oasis. won’t leave the building after the first song and quit the stage and not come back on, right? That’s okay.

Natalia:
Yes, sorry, I’m not a big fan of that anecdote. Our artists, when they’re performing in ways that we have produced, like an Avatar show, they’re always going to perform. That’s the beauty. And they can be performing even in multiple places at the same time, which is the other beauty of our model, it’s very scalable.

Kasper:
Do you think there’s a musical genre or genres as it may be that doesn’t lend itself well to this concept? Because I could imagine going to a classical concert with Mozart playing. Is that possible?

Natalia:
Well, it’s all about making sure that we have our criteria, our quantitative criteria fulfilled and classical music does, yeah, typically does not fulfill that. Mood music typically does not fulfill that either. It’s well-known global music from artists that…

Kasper:
A bit too niche maybe. Okay.

Natalia:
A lot of people know and love and that has proven to be evergreen.

Kasper:
Okay, well I’m gonna plant a seed here. I’d love for you to do the Rolling Stones. I know we disagree a little bit on where we stand on the Rolling Stones, but you know, we’re running out of stones. You know, soon they’re all gonna be gone and I’d like to go to concerts. So just putting that out there in case you’re out looking.

Natalia:
I’ll make a note, I’ll make a note. This is one of the beauties of the meetings that we have. Everyone has an opinion about the artist and everyone wants to chime in and give ideas, is very refreshing and it’s always very, very welcome.

Kasper:
More fun, I’d expect.

Natalia:
Yes.

Kasper:
We have time for just a couple more questions, Natalia. What’s the one thing you think private equity at large or private markets could learn from the music industry?

Natalia:
Hmm, that’s a good question. I think we’re already doing it, but music and artists are always reinventing themselves and always evolving. So I think at some stage, the private equity industry is already doing that. Well, definitely, I would say just to have more fun and have more joy.

Kasper:
Maybe a bit too much, in fairness, at the moment. Okay, okay, that’s a good one. I’d second that one. Also, you raise billions across different sectors and so on and so forth. What’s harder convincing LPs or convincing artists to be acquired by a private equity buyout shop?

Natalia:
Well, like I said before, we’re not in the business of convincing. We’re in the business of showing opportunities and illuminating the opportunity. But I focus on investors. So I do go to see some of the artists and I participate in parts of it. But convincing the artist is the job of my fellow team members. But at the end of the day, it’s almost like a GP that invests in founder companies. The artists are the founders of their legacy. So convincing them is as convincing a founder. It’s not only about the money, it’s about what are you going to do with my catalogue? What are you going to do with my legacy? Are you going to nurture it? So I can’t speak as to how difficult it is to convince artists because it’s not my job. But as I mentioned before, investors, we can only tell them who we are and how we operate and be transparent and share our conviction and our data and make sure that we’re aligned and then trust that they will do the best decision for them. Hopefully they will choose as partners to invest in this asset class.

Kasper:
Last question, if you could own the rights to one song, just for the story, what song would you pick?

Natalia:
That’s a very easy one. And this has nothing to do with me working for Pophouse but that would be Dancing Queen.

Kasper:
There we go. That’s the last word on that. Natalia, this was fantastic. A really interesting conversation on Pophouse on music, how you’re redefining the industry. I took a few notes. We covered your career from music to private equity. That in itself is quite a journey, I think. How you access entertainment as an asset class. How you look at catalogues as companies and try to grow them. How to work and travel. And having a unique value proposition probably still is the secret to a large and a good and a maybe speedy fundraise. I love the artist centric approach, building and taking care of their legacy. That must be hard to convince them off nonetheless. Diversity within the team. I think that’s fantastic as well. I still have trouble myself in my mind marrying up Björn and Conni. I don’t know any of them personally, but it just, it would never have struck me. AI as a tool. I think we’re looking at that, all of us, but.

Natalia:
Thank you

Kasper:
Again, maybe within music, it’s not as obvious that we should all have more fun in our industry. And then finally, and I’m going to put it out here again, keep an eye out for the Rolling Stones. Natalia, thank you so much for joining us on Balentic Edge.

Natalia:
I’m gonna do it. Thank you so much, Kasper It’s been a pleasure.

Kasper:
And thank you also to all our listeners for tuning into this, I think fair to say, special episode.

Kasper:
Thank you for tuning in to Balentic Edge. I hope you enjoyed the conversation. If you did, please hit follow on Spotify or Apple or subscribe on YouTube. And please share this episode with a friend or colleague. Got feedback or questions? I’d love to hear from you. Connect with me on LinkedIn. This episode was brought to you by Orca, helping GPs reach the right LPs and LPs discover the right funds. Learn more at balentic.com/Orca. Thanks again for listening and until next time, stay illiquid.

Kasper:
Finally, a small but necessary disclaimer. The views expressed in this podcast are solely those of the hosts and the guests and are provided for informational purposes only. They do not represent the views of any affiliated organizations, employers or entities. Nothing discussed should be construed as investment, legal, tax or business advice. Any reference to specific funds, companies or investment strategies are purely illustrative. and do not constitute an offer, solicitation or recommendation to buy or sell any security or financial instrument. Listeners should consult their own professional advisors before making any investment or financial decisions.