As the troubled streaming service SoundCloud appears on the verge of investment from two private equity firms, media reports say that the new investors are eying former Vimeo CEO Kerry Trainor to replace cofounder and current CEO Alexander Ljung, who would helm the company’s board. Trainor would recruit a new chief operating officer, Recode reported, citing investor documents.
Under the deal, the music streaming platform is set to receive nearly $170 million from the Raine Group and Singapore’s Temasek. In a message to investors, Ljung warned that the company could cease to “continue as a going concern” if the deal does not close today (Aug. 11).
SoundCloud investors were informed of the deal Tuesday. Some existing institutional investors will also participate in the new funding, which is set to close Friday. Axios was first to report on the new cash infusion Thursday morning, and Variety was able to confirm the new funding with a source close to the company.
Under the deal, the new investors will acquire more than 50 percent of the company, which recently had its valuation slashed to $150 million. In 2014, the company was in talks to sell itself to Twitter for more than $1 billion.
Reps for SoundCloud did not immediately respond to Variety‘s request for comment or confirmation.
The reports were the latest in a tumultuous few months for the popular but financially challenged company, which has undergone an awkward transition from a free service to a partially paid one.
Shortly after the company laid off 40 percent of its staff and closed two offices early in July, a report in TechCrunch claimed that the company, which the founders warned early in the year may not have enough money to see it through the end of 2017, may not have enough cash to see it through the end of the summer.
SoundCloud responded with a statement in which it said in part: “There are a number of inaccuracies within the TechCrunch article. They seem to stem from a misinterpretation of information by one or two laid off employees during a recent all hands meeting … To clarify, SoundCloud is fully funded into the fourth quarter.”
In July, Chance the Rapper issued a pair of tweets publicly supporting the company that initially seemed to indicate he would be providing some kind of financial sustenance, but a SoundCloud rep emphasized to Variety that his contribution was purely moral support. Hours later, a blog post from co-founder Alexander Ljung claimed the company was “safe.”
Founded in 2008 by Ljung and partner Eric Wahlforss, the platform was originally established as a site for DJs to upload their mixes and quickly became a favorite destination for all kinds of musicians, as well as labels seeking a fast and easy way to circulate music quickly. Yet licensing and royalty challenges forced the company to become a more traditional streaming service and it has struggled in its efforts to encourage users to opt for its paid premium model — a crowded field that even Apple Music has found daunting.