SoundCloud Won’t “Continue” Unless Investors Rescue It Now, Says CE0 Lung [UPDATED]
UPDATE] SoundCloud will be forced to shut down soon unless investors vote to step in with $169.5 million to rescue it, according to multiple reports. Today (Friday 8/11/17) is the deadline for the vote, according to a document circulating among investors.
SoundCloud won’t be able “to continue as a going concern” unless it get a major cash infusion, CEO Alexander Ljung reportedly told investors this week. Multiple reports put the needed investment at $169.5 million based on a current pre-cash valuation of just $150 million. Previous funding rounds for SoundCloud had valued the company at $700 million and more.
If the deal goes through, former Vimeo CEO Kerry Trainor would replace founder and current CEO Alex Ljung, who will stay on as board chair, reports Recode based on documents currently circulation to potential investors. Trainor would also bring in a new COO.
Some of the new funding would be used to pay off SoundCloud’s debt, including a $70 million credit line it took this spring; and would dramatically reshape its capital outlook for the better. It would also give the struggling company time to put itself back on the market in much better financial shape and at a much lower valuation.
Leading the potential funders for the new round are Raine Group and Temasek, as we had previously reported.