SoundCloud has just completed a fresh round of investments, and it appears that investors want a change in leadership. According to investment documents, the founder and current CEO, Alex Ljung would be pushed out and moved to chairman of the board for the company. While Vimeo’s former CEO Kerry Trainor would take over the reigns as CEO of SoundCloud. Trainor would also bring in a new COO or Chief Operating Officer, who will be Mike Weissman. Weissman worked with Trainor at Vimeo, so the two know each other quite well. SoundCloud is looking to raise around $170 million, and this is at a value of $150 million for the company before this investment. And reports show that the majority of the money would come from Raine Group and Temasek.
That $150 million valuation is much lower than SoundCloud had valued itself just 3 years ago. In 2014, SoundCloud thought it was valued at $700 million and thought it could sell itself for around $1 billion. SoundCloud had been in talks with Twitter, among other companies, for an acquisition. But that ultimately has not happened. SoundCloud has been struggling financially as of late, as it is in the crowded streaming music industry that is already full of companies that are barely turning a profit, or are losing money – like Spotify, who has yet to turn a profit since its inception in 2006.
The cash from this round of investing would likely be used to pay off some of SoundCloud’s existing debt. It took out a credit line of around $70 million in March. There’s no word on when that credit line would become due, but having the money to pay it off is a good thing. Since SoundCloud took out this credit line, the company has had to lay off around 40% of its workforce, which is definitely a big deal. It’s common for companies to lay off workers when it is no longer as profitable as it once was, but a 40% reduction in workers is a pretty huge reduction. About 173 people lost their jobs at SoundCloud, this year alone. It’s currently unclear if this $170 million investment will help SoundCloud stay afloat or if it’ll help turn the company around and become more competitive.