Today online musical instrument marketplace Reverb.com announced a $2.3 million Series A round from a unique group of entrepreneurs and musicians.
The eclectic list includes Lean Startup author Eric Ries, Brad Keywell and Eric Lefkofsky of Lightbank, David Lowery of Cracker and Camper Van Beethoven and Rick Nielsen of Cheap Trick. Reverb’s own founder and CEO, David Kalt, also participated in the round, adding to the $500,000 he already invested in seed funding this summer.
Kalt, who owns vintage guitar dealership Chicago Music Exchange, founded Reverb in 2012 after using eBay to sell over $500,000 worth of guitars that year - and paying the site about 10 percent of each sale. As a musician and a seasoned entrepreneur himself (he sold his online broking company optionsXpress to Charles Schwab for $1 billion in 2008), he said he knew his frustrations with eBay were a sign of a market ripe for disruption.
It turns out Kalt had a good hunch: Reverb’s low 3.5 percent transaction free has already attracted more than 4,000 dealers “ranging from individuals who are building businesses around their love of instruments and gear, to some of the largest, best known dealers in the country, such as Dave’s Guitars,” Kalt said in a press release.
On the flipside, the marketplace serves as a Pinterest-like site and app for musicians, giving them an educational, yet “beautiful user experience, musician-curated content, fast and free listing tools and fees that are one-third those of eBay." Also, buyers have the ability to make an offer on over 90 percent of Reverb’s listings.
Keywell said that Lightbank’s support of Reverb not only is rooted in personal support (the three grew up in the same community in Michigan), but also is a "very exciting" investment for Lightbank, as Reverb is positioned in a $7 billion market for new and used instruments.
"From the success he's achieved at optionsXpress and Chicago Music Exchange, and his huge entrepreneurial acumen and resourcefulness, we have enormous confidence in David and his ability to grow Reverb into something very special," Keywell said. "Me and Eric are extremely supportive of David and believe in his model to shake up the musical instrument industry."