Update: SoundCloud is apparently safe after being given emergency funding. Read more from an official statement from former CEO, Alexander Ljung.
Recently, fans and users of the online audio distribution platform, SoundCloud, have had reasons to worry. A series of devastating layoffs, bleak funding reports, and impending closing signs made headlines throughout the music industry and beyond. Several artists poured out their support for the platform. In particular, Chance The Rapper publicly announced his efforts to help rescue the platform that helped him gain prominence with his earlier mixtapes. Details were scarce, but he eventually tweeted that “SoundCloud is here to stay.” Well, according to Axios, that decision will be made today, on Friday, August 11th.
Axios has reportedly “obtained a circular sent to existing shareholders on Tuesday, which requires them to accept or reject a reorganization proposal by the end of Friday.” If the new investment — $169.5 million at a $150 million pre-money enterprise valuation — is rejected, then the company will likely not be able “to continue as a going concern,” says CEO Alexander Ljung. The investors are reported to be Raine Group and Temasek. Additional existing backers would include Union Square Ventures, Doughty Hanson and Atlantic Technology.
SoundCloud hopes that “financing of this size will enable to Company to pay off its remaining debt, while ensuring a strong, independent future.” If the transaction does not close and the platform cannot obtain additional funding, SoundCloud faces very serious liquidity concerns. There are additional reports coming from ReCode that several investors would like to replace founder Alex Ljung with former Vimeo CEO Kerry Trainor. In other words, the future is very unclear.
SoundCloud has been an essential music platform for both independent and major artists. Like Chance, many prominent musicians — notably in the electronic and hip-hop community — relied on the service to get their music out there. Chance and Young Thug recently shared their new song “Big B’s” exclusively on SoundCloud after news broke of its turmoil in an effort to shift positive attention to the platform.