Friday, March 24, 2017

SoundCloud secures $70 million in debt finance | UNLIMITED | CMU


SoundCloud has secured another $70 million in debt finance according to documents filed with Companies House that were spotted by Business Insider. So, that’ll keep the sounds in the cloud streaming for a little while longer.

There has been quite a bit of chatter of late about the digital firm’s financial situation, mainly because of a statement in its official accounts for 2015 which said that, while directors believed the business had sufficient funds to see it through 2017, “the risks and uncertainties may cause the company to run out of cash earlier than that date”.

It has been widely rumoured that SoundCloud has been both speaking to potential buyers and seeking to raise new finance in recent months. One anonymous source speaking to the FT characterised the latest stint of finance raising as passing round the begging bowl, while Recode reported that the company’s owners were now considering bids for the business far below its one time valuation of $700 million.

For its part, SoundCloud has repeatedly played down any suggestion that it is falling on hard times. Having diversified its revenue streams beyond just charging content owners hosting fees, the company is now focused on trying to get properly into the subscription streaming business with its £5.99 and £9.99 packages, which offer users more functionality and more content respectively.

While rebutting the various doom and gloom rumours, SoundCloud always insists that it is optimistic about its subscriptions business, and that it will help the company ultimately achieve profitability. Though some question whether it can really take on Spotify and Apple Music in the competitive and costly subscription streaming game, even with its large free user-base to which it can try and upsell premium.

The new round of finance comes from Kreos Capital, Ares Capital and Davidson Technology. It’s not the first injection of debt finance the company has taken – it having received $35 million from Tennenbaum Capital Partners at the start of last year before another round of equity financing.

Confirming the latest cash boost, SoundCloud said yesterday: “We are pleased to have secured a flexible $70 million credit line from Ares Capital, Kreos Capital and Davidson Technology that is ideally structured for a company with our strong credit rating and in our stage of growth. This new funding will enable SoundCloud to strategically grow our technology and personnel resources to fuel our expected 2.5 times year-over-year growth in 2017, while building a financially sustainable platform on which our connected community of creators, listeners and curators can thrive for years to come”.


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