Spotify has raised 526 million US dollars (£339 million) from investors globally to help fend off the threat from rival Apple in a move valuing the group at 8.5 billion US dollars (£5.5 billion).
Stockholm-based Spotify - which offers free streaming music and a paid-for subscription service that lets users listen to music offline without adverts - announced investments from a raft of hedge fund managers as well as Nordic telecoms company TeliaSonera as part of the mammoth fundraising.
It want to use the cash to expand in the face of growing competition, with technology giant Apple unveiling its long-awaited music-streaming service Monday.
Apple Music will launch in more than 100 countries on June 30.
TeliaSonera is paying 115 million US dollars (£74 million) for a 1.4% stake in Spotify, saying it will extend their existing partnership to focus on "media distribution, customer insights, data analytics and advertising".
Other investors reportedly included US investment banking giant Goldman Sachs, UK asset managers Baillie Gifford, Landsdowne Partners and Rinkelberg Capital, as well as Canadian hedge funds Senvest Capital and Discovery Capital Management.
Spotify also revealed new figures as it steps up the battle in retaliation to the launch of Apple Music, saying it now has 75 million active users, with 20 million of them paying subscribers.
That compares with 60 million active users and 15 million subscribers announced in January.
The group has more than 30 million songs with over 20,000 added each day.
But although Spotify has grown its revenue, the firm remains unprofitable. It increased its revenue by 45% to 1.3 billion US dollars (£838 million) in 2014, but posted a 197 million US dollar (£127 million) operating loss.
Spotify has paid three billion US dollars (£1.9 billion) in royalties to rights holders since it was launched in October 2008, including more than 300 million US dollars (£193 million) in the first three months of 2015.