As expected, SoundCloud on Friday announced it has reached an agreement on a significant investment from global merchant bank The Raine Group and Singapore-headquartered investment company Temasek. The streaming company is set to receive approximately $170 million, a source tells Variety.
In connection with the investment, former Vimeo CEO Kerry Trainor becomes chief executive officer and Michael Weissman, also formerly of Vimeo, becomes chief operating officer. Cofounders Alexander Ljung and Eric Wahlforss will remain with the company: Ljung steps down as CEO and becomes chairman of the board while Wahlforss remains chief product officer. The company was recently valued at $150 million — $20 million less than the new investment round, which gives a sense of its challenged financial situation.
In a statement, the company said “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 — that fuel SoundCloud’s one-of-a-kind, creator-driven listener experience.”
In a statement, Ljung said, “Now in its 10th year, I’m proud to say SoundCloud stands as an indispensable part of global music culture. I look forward to fully dedicating my time to leading the board and helping drive SoundCloud’s long term strategic vision, and forging strategic partnerships and connections with industry partners and our one-of-a-kind creative community. With Kerry’s love of music and sharp business acumen, I know SoundCloud is positioned for continued success for many years to come.”
Trainor added, “As a huge fan of the SoundCloud platform since its founding, I deeply admire what Alex and Eric have built. There is only one SoundCloud and its importance to creators and music culture is undeniable. I’m very excited to join this talented team and build the next chapter of growth around SoundCloud’s mission to empower audio creators. I look forward to sharing more about our plan and path forward in the months ahead.”
“SoundCloud is a unique and essential music platform for new and developing artists,” said Fred Davis, Partner at Raine Group. “For ten years, SoundCloud has been the birthplace of genre-breaking musical movements in Electronica and Hip Hop. We are excited to partner with Temasek on this investment and are confident our involvement can ensure it remains the most artist-friendly music creation and streaming platform in the world.”
The announcement concludes at least one phase of 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. In a message to investors earlier this week, Ljung warned that the company could cease to “continue as a going concern” if the investment did not close today (Aug. 11). 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 refuted that report with a statement which 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.