SoundCloud has been collecting profit for quite some time. They have, however, not always been the best at doing so. In fiscal year 2015, SoundCloud’s financials were at a loss of €51.22 million (Euro), which translates to $55 Million (USD) in today’s currency.
One way of increasing revenue has been creating programs like SoundCloud Premium to try to add revenue. With this option, along with others, SoundCloud recently released they are attempting to put together a $100 Million (USD) credit line to pay off debt in funding. Unfortunately, they have yet to fulfill this capital. They have, however, worked out funds with three new investors, Ares Capital, Kreos Capital and Davidson Technology, in order to gather $70 Million (USD) “which it will use to build out more technology, to hire more people, and to build “a financially sustainable platform.”(Source)
This new, flexible, credit line, according to a SoundCloud spokesperson,
“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.” (Source)
The credit line, according to market records for the company, brings the total that the company has raised life-time, to $320 Million (USD). In 2014, equity was placed at $60 Million (USD and the company has kept its value at $700 Million (USD) since then.
Finance has always been an interesting issue for Soundcloud as there have been at least two attempted acquisitions of the company, one from Twitter and one from Spotify, where asking prices and altered priorities have resulted in a failure in sale. Another issue is that SoundCloud is registered as accompany in the United Kingdom while founder Alexander Ljung is from Sweden, founder Eric Wahlsforss is from Berlin and SoundCloud offices are in New York. This causes problems in the company’s annual financial filings with the UK’s Companies House which call out financial numbers constantly in the red, or in financial difficulty.
The goal of posting this debt round is to give a little more openness about the investments. There isn’t total openness regarding the debt round, because it does not detail payment terms of the debt. It does, however, give a little insurance against the risks and uncertainties that come with SoundCloud. To read the full Debt Filling Report, click here.