SoundCloud is Asking Existing Backers to Support a Rescue Deal (Aug 10, 2017)
Despite SoundCloud’s repeated protestations that it’s not on the verge of going under, the scuttlebutt has been that it is indeed just a few months from running out of cash, and two recent new investors have been reported as potential saviors: Singapore’s Temasek Holdings and the Raine Group. SoundCloud is now reportedly communicating with existing investors and asking them to back the rescue effort by these two new backers as a last-ditch attempt to avoid having to wind down the business. Some of the numbers involved are a bit crazy – the new investment is $169.5 million at a $150 million pre-money enterprise valuation and some existing shareholders will see their liquidity preference slashed by 40%. But all this would apparently put the company on a much sounder financial footing and allow it to consider searching for a way out of its current predicament. I’m still bearish that there’s any way to really turn SoundCloud around given its history and what’s happened in the industry since it experienced its meteoric rise, and imagine the most likely long-term outcome is still an acquisition for intellectual property and possibly customer data. Update: Recode is reporting that the CEO will be replaced and kicked upstairs to the board chair role in favor of former Vimeo CEO Kerry Trainor if the deal goes through, which now seems very likely based on other reporting later in the day.
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