SoundCloud fired off 40 percent of its workers last month, with 173 workers leaving in an attempt to cut costs. The group only had sufficient runway left to last into Q4, and today’s investor decision was observed as a do-or-die time for the company. Now it will have the chance to try to right the ship, or sail into an authorized port via acquisition.
SoundCloud refused to share the valuation or number of the new funding round. Yesterday, Axios told the company was increasing $169.5 million at a $150 million pre-money valuation. That’s a steep drop in value from the $700 million it was estimated at in previous funding rounds. The new Series F round probably gives Raine and Temasek liquidation choices that override all previous investors, and the Series E investors are arranging their preferences reduced by 40 percent. They’re definitely happy about that, but it’s greater than their investment vaporizing.
Raine will get two board seats for clearing out SoundCloud, with partner and former music industry lawyer Fred Davis, and the vice president who heads music investments, Joe Puthenveetil, taking those seats.
While relinquishing the CEO role probably wasn’t exactly what Ljung had wished for, at least he gets a place on with the company as chairman of the committee. “This financing means SoundCloud remains strong, independent and here to stay,” he wrote.
News story led to a flurry of follow-on coverage, indicating fans and artists to talk up in favor of the service. The rally was suggestive of the love shown to Vine after Twitter stated it would shut down. Popular musician Chance The Rapper decided to get involved to save the company. He, like several other indie hip-hop artists, made their title on the platform as part of a class that came to be called “SoundCloud Rap.” In the end, SoundCloud was protected when Vine wasn’t.
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