SoundCloud Set To Secure Financial Future
Reports say that SoundCloud’s search for the funding necessary to secure its continued existence may be at an end.
As originally reported by Axios, the company is said to have circulated a ‘do-or-die’ reorganisation proposal to shareholders in order to secure funding from boutique merchant bank The Raine Group and Singapore’s state investment firm Temasek.
“Financing of this size will enable to Company to pay off its remaining debt, while ensuring a strong, independent future… In the event that the transaction does not close and in the vent SoundCloud does not otherwise obtain additional funding, based on current cashflow forecasts, SoundCloud faces liquidity concerns in the near term,” a note sent to SoundCloud investors is reported to have said.
However, the lifeline does come with a catch for investors. As part of the reorganisation, The Raine Group, Temasek and a number of returning backers will receive a special class of common stock that has seniority and preference over the company’s other investors.
In addition, they say existing Series E investors will have their liquidity preference cut by over 40 percent.
The move comes following SoundCloud’s move to regain profitability by cutting 40% of its global staff several weeks ago. Following that decision, SoundCloud CEO Alex Ljung has moved to directly reassured fans and investors on the company’s blog.
He says “there’s an insane amount of noise about SoundCloud in the world right now. And it’s just that, noise. The music you love on SoundCloud isn’t going away, the music you shared or uploaded isn’t going away, because SoundCloud is not going away. Not in 50 days, not in 80 days or anytime in the foreseeable future.”
“Your music is safe,” he insists.