SoundCloud was on its deathbed before being bailed out over the past week.
What is going on and what does this mean for the millions of artists who share their music on the streaming platform? Here is the nuts and bolts of the challenges and opportunity as reported by TechCrunch.com
“SoundCloud has just closed the necessary funding round to keep the struggling music service afloat. CEO Alex Ljung will step aside though remain chairman as former Vimeo CEO Kerry Trainor replaces him. Mike Weissman will become COO as SoundCloud co-founder and CTO Eric Wahlforss stays as chief product officer. New York investment bank Raine Group and Singapore’s sovereign wealth fund Temasek have stepped in to lead the new Series F funding round of $169.5 million.
SoundCloud laid off 40 percent of its staff last month, with 173 employees departing in an effort to cut costs. The company only had enough runway left to last into Q4, and today’s investor decision was viewed as a do-or-die moment for the company. Now it will have the opportunity to try to right the ship, or sail into an established port via acquisition.
SoundCloud declined to share the valuation or quantity of the new funding round. Yesterday, Axios reported the company was raising $169.5 million at a $150 million pre-money valuation. That’s a steep decline in value from the $700 million it was valued at in previous funding rounds. The new Series F round supposedly gives Raine and Temasek liquidation preferences that override all previous investors, and the Series E investors are getting their preferences reduced by 40 percent. They’re surely not happy about that, but it’s better than their investment vaporizing.
Raine will get two board seats for bailing out SoundCloud, with partner and former music industry attorney Fred Davis, and the vice president who leads music investments, Joe Puthenveetil, taking those seats.
While abdicating the CEO role probably wasn’t exactly what Ljung had hoped for, at least he gets to stay on with the company as chairman of the board. ‘This financing means SoundCloud remains strong, independent and here to stay,’ he wrote.” – Posted by Josh Constine | Writer for TechCrunch
Long story short, artists who have a profile on SoundCloud, you’re music is safe for now and it’s still free to create a profile but that could change as they find new ways to monetize the site and pay back investors. So, stay tuned!