(Bloomberg) -- Music-annotating startup Genius Media Group Inc., a site that drew attention in part for outsized funding from venture capitalists, has sold its assets to a Santa Monica, California-based media holding company for $80 million.
The buyer is MediaLab.Ai Inc., which will cut some jobs as part of the process. “We are restructuring the way in which original content is produced at Genius and as part of that some very talented individuals on the content and production teams were let go,” MediaLab said in a statement. The company will not make cuts to the teams handling sales, product or engineering, said a person familiar with the matter who asked not to be identified discussing private information. “The scale of the community platform is what attracted us to Genius and this is where we will be heavily investing going forward, with a renewed focus on emerging artists,” the company said.
Genius, a Brooklyn-based company that got its start providing context for rap lyrics, will join a portfolio at MediaLab that includes once-buzzy messaging apps such as Kik and Whisper. It also owns mixtape app DatPiff. On its website, MediaLab says it attracts more than 80 million users monthly.
“MediaLab’s commitment to investing in artists and fan-driven communities makes them the ideal partner to propel Genius forward,” said Tom Lehman, co-founder and chief executive officer of Genius. “We are immensely grateful to everyone who has made Genius what it is today.”
The sale represents a comedown for Genius, which at one time drew contributors ranging from singer-songwriter Lorde to rapper Nas to music producer Rick Rubin. It entered into partnerships with Spotify and Apple Music.
But the startup faced challenges. Its price tag of $80 million represents less than what it raised over the years in venture capital, according to PitchBook.
In 2012, Genius, then known as Rap Genius, raised eyebrows in Silicon Valley when Andreessen Horowitz, then a relatively young and untested venture firm, invested $15 million in the business. At the time, that was a considerable sum of money for a three-year-old company, but its backers seemed convinced of the site’s potential.
Genius’s mission was to “create the Internet Talmud,” wrote Marc Andreessen in a blog post in 2012, referring to interpretive texts on Judaism. He suggested the company could expand to “annotate the world,” including “poetry, literature, the Bible, political speeches, legal texts, science papers.” In fact, it had trouble expanding beyond its core group of music fans.
Because the company’s obligations to its preferred shareholders exceeded the sale price, investors won’t be paid out in full, according to a document reviewed by Bloomberg. Genius finalized the deal to sell its assets this week, with $60 million paid on closing and $20 million to be paid in two years.
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