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