Debt finance

SoundCloud Secures $70M in Debt Funding

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By Chris Cooke | Posted on Friday March 24th, 2017

SoundCloud secured an additional $70 million in debt financing according to filings with Companies House that were spotted by Business Insider. So this will keep the sounds in the cloud streaming for a bit longer.

There has been quite a bit of chatter lately about the digital company’s financial situation, mainly due to a statement in its official accounts for 2015 which indicated that while directors believed the company had funds sufficient to carry it through to 2017, “risks and uncertainties may cause the company to run out of cash before that date”.

It’s been widely rumored that SoundCloud has both talked to potential buyers and sought to raise new funding in recent months. An anonymous source speaking to the FT characterized the latest fundraising as going through the begging bowl, while Recode reported that the company’s owners were now considering offers for the business well below its unique valuation of $700 million.

For its part, SoundCloud has repeatedly played down any suggestion that it is having a hard time. After diversifying its revenue streams beyond just charging content owners hosting fees, the company is now focused on trying to properly enter the subscription streaming business with its $5.99 plans. £ and £9.99, which give users more features and more content respectively.

While refuting various pessimistic rumours, SoundCloud still insists that it is optimistic about its subscription business and will help the company achieve profitability. Although some wonder if it can really take on Spotify and Apple Music in the competitive and expensive subscription streaming game, even with its large base of free users to which it can try to sell premium products.

The new funding round comes from Kreos Capital, Ares Capital and Davidson Technology. This isn’t the first injection of debt funding the company has taken – it received $35 million from Tennenbaum Capital Partners early last year ahead of another round of equity funding.

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