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Published: Tue, August 15, 2017
Economy | By Melissa Porter

SoundCloud Loses CEO But Stays Afloat With New $215 Million Investment

SoundCloud Loses CEO But Stays Afloat With New $215 Million Investment

As rumors suggested earlier this month, SoundCloud has officially confirmed that it has secured investments from The Raine Group and Temasek.

The struggling audio-hosting startup SoundCloud has secured a financial lifeline, with two investors putting up nearly $170 million to help the company stay afloat, according to Billboard. This financing means SoundCloud remains strong & independent.

In its blog post, the decade-old, Berlin-based company said that at current sales levels, it was on track to more than double its revenue to US$100mil over the next 12 months. Ljung will remain in the company as Chairman.

Ljung will continue to serve as chairman, and co-founder Eric Wahlforss will stay with SoundCloud as chief product officer.

Former Vimeo CEO Kerry Trainor will replace founder Alex Ljung as chief executive.

Trainor said the company will compete less directly with larger rivals Spotify Ltd. and Apple Music, an acknowledgment that the company's costly years-long effort to build a rival subscription service wasn't successful. "As I said, SoundCloud is here to stay".

Help has now come in from Temasek and U.S. investment bank Raine Group, who have together invested $170m, but at a low pre-money valuation of $150m compared with a value of $700m at previous funding rounds. The company is also shifting its business strategy, to focus on selling more tools for artists, podcasters and other content creators to share material online.

Ljung says that "I'm excited to hand the CEO reins over to Kerry to allow me to fully focus on the role of the Chairman and the long-term".

Soundcloud will now need to look at reducing costs and doing more to monetise the service which, according to the firms latest publicly available figures, has more than 40 million users.

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.

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