Struggling music streaming app SoundCloud gets new funds, top management

The SoundCloud Ltd. application is seen on an Apple Inc. iPhone in an arranged photograph in Washington, D.C., U.S., on Tuesday, July 18, 2017. Photographer: Andrew Harrer/Bloomberg

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 Temasek.

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 and Facebook – 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 product officer.

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.

“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,” SoundCloud said.

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 paying fees.

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 and Amazon.

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 going concern”.

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 dot-com era.

Also Read:

SoundCloud said close to sale of stakes to Raine Group, Temasek

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.