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Twitter’s Annual Report Reveals That Its $70 Million SoundCloud Investment Was a Bust

Twitter’s lost almost all of the money it had invested in SoundCloud, the company disclosed as part of its 2017 annual report Friday. The company had to write off a total of $66.4 million of the $70 million it had invested into the music service in 2016, according to the filing.

Twitter had been in on-and-off talks to acquire SoundCloud for years, but instead ended up investing $70 million into the music service as part of a $100 million round of funding back in June of 2016. However, SoundCloud ran out of money in early 2017 and wasn’t able to raise any additional financing.

SoundCloud finally secured a Hail Mary deal that included $170 million of new funding from the Raine Group and Singapore’s Temasek in August of 2017. However, that deal came with a corporate restructure that wiped out many of the start-up’s early investors, and ultimately also forced out SoundCloud’s founding CEO Alexander Ljung.

Twitter was apparently on the losing side of that deal as well, as Friday’s report shows. The report doesn’t mention SoundCloud by name, but all but spells who it is talking about by mentioning that “the investee (completed) a financing with third parties and reorganization.”

SoundCloud was reportedly valued $700 million when Twitter invested in the audio startup. Before receiving the cash injection from Raine and Temasek, that value had plunged to $150 million. That resulted in Twitter acknowledging that “the carrying value of this investment was not expected to be recoverable within a reasonable period of time,” according to its annual report.

Twitter’s own history with music has been a rocky one even before this write-down. The company at one point hired a team to develop and launch a dedicated music app, but shuttered those efforts just a year after its launch. Around the same time, Twitter was also in advanced talks to acquire SoundCloud, but ultimately pulled out of the deal last-minute.

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