UPDATED 22:33 EDT / AUGUST 13 2017

CLOUD

Soundcloud saved from bankruptcy by new $169.5M investment

Embattled cloud audio distribution service Soundcloud Ltd. has gotten a reprieve from bankruptcy by managing to raise $169.5 million from Raine Group and Singapore’s sovereign wealth fund Temasek.

As part of the Series F round, Chief Executive Officer Alex Ljung is being replaced by Kerry Trainor, the former head of the IAC/InterActiveCorp-owned online video streaming service Vimeo.

Founded in 2007, Soundcloud offers cloud audio storage and streaming services that appeal to both musicians and podcasters alike. But not unlike companies before and after it, it has struggled to monetize its user base, burning through its venture capital without being able to put the company in a profitable position a decade after launch.

Financial problems at Soundcloud started to emerge in January, when the company reported a loss of $52 million and warned it may run out of money by the end of the year if it was unsuccessful in obtaining new funding. With no white knight yet found, in June Soundcloud laid off about 40 percent of its employees and closed its San Francisco and London offices in an attempt to stop the money burn in what looked like a last throw of the dice to keep the company afloat.

In a blog post Friday, Ljung spun the news, saying that the “financing means SoundCloud remains strong & independent” and “is here to stay.” That may well be the case, but radical changes may be ahead for the company, given that the new round, $169.5 million, is said to have been raised on a $150 million valuation.

It’s one thing for a startup to raise money in a “down round: but it’s extraordinarily rare for one to raise money at a valuation that is lower than the amount being invested. Raine Group and Temasek must think they can turn the company around and return it to a much high valuation.

Given that Soundcloud has never made money, serious changes to the service cannot be far away.

Photo: freenerd/Flickr

A message from John Furrier, co-founder of SiliconANGLE:

Your vote of support is important to us and it helps us keep the content FREE.

One click below supports our mission to provide free, deep, and relevant content.  

Join our community on YouTube

Join the community that includes more than 15,000 #CubeAlumni experts, including Amazon.com CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger, and many more luminaries and experts.

“TheCUBE is an important partner to the industry. You guys really are a part of our events and we really appreciate you coming and I know people appreciate the content you create as well” – Andy Jassy

THANK YOU