SoundCloud’s Future to Be Determined by a Vote Today


SoundCloud’s Future to Be Determined by a Vote Today
SoundCloud

After unexpected layfs, reports its impending demise due to a lack funding and the perceived heroics Chance The Rapper, the fate SoundCloud will be determined by one vote on Friday (Aug. 11). The folks at Axios reported the news yesterday (Aug. 10).

SoundCloud needs new investors in order to survive, and while the streaming service, which was co-founded by Alex Ljung and Eric Wahlforss, is entertaining rescue investments from two parties, those potential investors have to be approved by some the older ones. But that is in no way guaranteed, because the entrance new investors could alter the picture significantly for the ones that had already put their money into the struggling streaming service.

According to Axios, the incoming “rescue investors,” Raine Group and Temasek, would receive “preferential treatment,” which potentially means worsened terms for older SoundCloud investors, making it more difficult to recover the money they’ve invested.

Ljung says if the SoundCloud rescue package isn’t approved, more his employees will leave and the company won’t have enough money to survive. In other words, if the older investors don’t approve the new ones—or in other words, vote “yes”—SoundCloud is probably done for.

As we said before, the existing SoundCloud investors aren’t in the best situations. If SoundCloud is sold or liquidated, Raine Group and Temasek would be the first investors allowed to recover their funds, along with other investors involved in what’s called a “Series F.” That group investors also includes Union Square Ventures, Doughty Hanson and Atlantic Technology. SoundCloud is asking for $170 million, setting the pre-money valuation the company to $150 million.

Ljung wants the older SoundCloud investors to vote “yes,” but ReCode reports that if they do, he will be fired before Vimeo CEO Kerry Trainor takes his place. And that might just be the beginning a significant change to SoundCloud leadership.

Any way you look at it, SoundCloud as we know it will either change forever or cease to exist altogether. We’ll just have to wait and see.

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