Wellington Partners and the charitable foundation tycoon Li Ka-shing from Hong Kong have been tipped as possible investors, among others.
The Li Ka-shing Foundation has previously invested in such online properties as Facebook and Joost.
Spotify, which streams free music in exchange for ad viewing, has been hailed as an alternative to battling piracy and illegal downloading. The company also offers a £9.99 premium subscription with unlimited streaming and zero ads.
Since its launch last year the service has amassed more than 2m users in the UK and Sweden, where its offices are based.
The company pays royalties for every song it streams, regardless of the advertising revenue.
The Financial Times reports that Spotify is also in talks with music industry executives in order to negotiate a strategic partnership for a better royalty agreement, or simply more funding.
Expectations are high for its launch in the US, expected in Q3 or Q4, where it will challenge Apple's iTunes dominance of the mp3 market.
In the meantime, Spotify is waiting approval of its iPhone application, with Apple's finger hanging on the trigger.
The Spotify iPhone app allows users to stream and store songs on the iPhone, which can then be listened to while the phone is "offline", essentially acting as an mp3 player and eliminating the need for iTunes.
Apple has a history of rejecting iPhone apps that are seen as competitive or redundant to its own technology.
Last week, the Google Voice iPhone app was turned down for approval, evoking a storm of controversy and causing some of the tech industry's elite to cancel their iPhone contracts, including the editor of TechCrunch Michael Arrington.
In a bid to woo advertisers, Spotify unveiled a video advertising format in conjunction with Sony Pictures last week.
The video player runs inside the Spotify application and allows the user to pause, rewind and adjust the player volume, while a separate audio message urges users to click on the campaign banner.