Is SoundCloud Imploding? Top Execs Jump Ship as ‘Desperate’ Fundraising Begins

Will 2017 see the end of SoundCloud?

2017 is shaping up to be a difficult year for SoundCloud.  Several months ago, Spotify walked away from SoundCloud acquisition talks.  In fact, SoundCloud co-founder Alexander Ljung all-but-confirmed bankruptcy rumors.  He even admitted that the company may go bankrupt should their GO subscription service fail to take off.

“SoundCloud may run out of cash earlier than December 31, 2017… These matters give rise to a material uncertainty about the Group’s ability to continue as a going concern.”

Add even more bad news.  Financial Times reports that the German streaming service just lost two key executives.  Marc Strigel, the company’s COO, and finance director Markus Harder have resigned.

The company quickly downplayed the high-profile exits. Without giving specific details, a spokesperson told FT,

“After five or so years, they felt it was time to move on to new adventures.”

The sudden (read: abrupt) exits come as the Berlin-based streamer prepared a new wave of fundraising. Once again downplaying the exits, a spokesperson said,

“SoundCloud is currently fundraising, which is typical of most startups of our size and in our phase of growth. This [exits] is unrelated to our ‘normal course’ fundraising efforts, which are being led by our recently appointed Chief Financial Officer [Holly Lim.]

SoundCloud remains in a position of strength and is confident in its long-term prospects as it continues to be the go-to platform for the creative community.”

Investors, however, painted a clearer picture of what’s going on inside the company.  After refusing to provide the company with additional funds, an anonymous German financier told FT that SoundCloud is “begging for money.”  He said that the company needs to rethink their $700 million valuation and settle for a lower amount.

The Berlin-based company quickly denied the desperation rumors.  Yet, the high-profile exits, and the new (read: hasty) fundraising rounds underscore SoundCloud’s poor position in the music streaming market.  The company has yet to turn a profit, and 2015 losses amounted to €51 million (or $54 million).  The service currently boasts over 200 million creators and 135 million tracks, most from new artists. After winning a Grammy, Chance the Rapper thanked SoundCloud.

“This is for every indie artist. Shouts out to SoundCloud for holding me down. It’s another one, baby!”

SoundCloud quickly celebrated the shoutout on their Twitter account.

 

6 Responses

  1. Avatar
    Music Stowaway

    A enterprise can’t keep burning cash (and usually other peoples cash) forever..

    At some point there’s gonna come a reality check…!

  2. Avatar
    Remi Swierczek

    Same for Pandora Radio, Spotify or TIDAL/w/Sprint. Bunch of confused MOOCHES of music industry on Ek’s DRUG dispensed by UMG SUICIDE team!

    Let’s don’t forget AppleMusic, GooglePlay, Amazon where losses are covered by deep pocket corporate parents!
    The only bright star of music industry running $500M true music profit is YouTube.
    Extremely successful accomplishment of UMG team.
    Vevo on YouTube is able to give for FREE all music on Earth for handsome return in secretly collected advertising CASH – well done conversion of $20B in music to $500M in ad cash.

    • Avatar
      Anonymous

      World changes, including the very dynamic music business, over the past five or so years have never ceased to amaze and astound me. However, the future does not seem to bode well for the likes of SoundCloud, Spotify Tidal & Pandora. It seems much will come to a head in 2017.

  3. Avatar
    doktor audio

    they lost the direct facebook play button, too. once a useful promotion tool

  4. Avatar
    Abilitify

    Chance the Rapper thanked Soundcloud for ‘holding me down’? DOesn’t he mean ‘lifting me up’? WHat kind of endorsement is it if you need a fricking translator?