gets new funds and top management
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[August 12, 2017]
By Eric Auchard
FRANKFURT (Reuters) - SoundCloud, the
world's most popular streaming music app, but one that has struggled to
find a profitable business model, said it received new funding on
Friday, insulating it from potentially running out of cash this year.
The company, which laid off 40 percent of its staff in July, said in a
blog post that the financing was raised from media-focused investment
bank Raine Group of New York and Singapore's sovereign wealth fund
It did not disclose the amount or its terms. Raine and Temasek were not
immediately available for comment.
One source familiar with the investment said it amounted to around $170
million (144 million euros), as reported on Thursday by online news site
Axios, which had obtained the deal's term sheet.
The company said that as part of the new investment, digital media
veterans Kerry Trainor and Michael Weissman, respectively the former
chief executive and chief operating officer of online video service
Vimeo, would take the same roles at SoundCloud.
The arrival of the former leaders of Vimeo - one of the biggest online
video rivals to Google's YouTube <GOOGL.O> and Facebook <FB.O> - raises
the prospect SoundCloud may evolve beyond audio streaming in a more
music video-oriented direction.
SoundCloud founder and former CEO Alexander Ljung has agreed to step
aside to become chairman of the board, it said. Co-founder and Chief
Technology Officer Eric Wahlross will remain at the company as chief
In July, SoundCloud fired 173 employees and closed its London and San
Francisco offices to focus on Berlin and New York. A spokeswoman for
SoundCloud said last month it remained fully funded into the fourth
quarter, while declining to comment on what lay beyond.
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SoundCloud CEO Alexander Ljung attends the LeWeb technology
conference in Aubervilliers, near Paris, France December 4, 2012.
REUTERS/Philippe Wojazer/File Photo
"The investment will ensure a strong, independent future for SoundCloud, funding
deeper development and marketing of its core tools used by millions of audio
creators - musicians, DJs, producers, labels, managers and podcasters,"
BACK FROM THE BRINK
SoundCloud remains the world's most popular free music phone app, with roughly
88 million active users, according to online audience tracking firm SimilarWeb.
It is supported partly by advertising, with only a small chunk of listeners
In its blog post, the decade-old, Berlin-based company said that at current
sales levels, it was on track to more than double its revenue to $100 million
over the next 12 months.
But SoundCloud has struggled to develop a listener subscription business model
to pay hefty royalties and compete with streaming music leaders Spotify, as well
as encroaching rivals Apple <AAPL.O> and Amazon <AMZN.O>.
Axios reported the term sheet circulating among existing investors since Tuesday
set Friday as a deadline to agree to the new investment structure. It cited
Ljung saying that otherwise, SoundCloud would not be able "to continue as a
Raine Group has been an active U.S. investor in media and entertainment
properties. Temasek has been one of the world's most active technology
investors, backing roughly 90 companies in the sector stretching back to the
(Reporting By Eric Auchard; Editing by Edward Taylor and David Holmes)
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