Economy

SoundCloud's Future Will Be Determined By A Vote On Friday

SoundCloud's Future Will Be Determined By A Vote On Friday”

Investors received a flyer from the company notifying them of the restructuring proposal, and asking whether they would accept or reject it, according to Dan Primack of Axios, who referred the meeting as "do or die". The valuation of the company would sit around $300 million after the investment; however, that investment still has to be approved. Following that decision, SoundCloud CEO Alex Ljung has moved to directly reassured fans and investors on the company's blog.

If the proposal were to be accepted, the company's main investment would come from Raine Group and Temasek. Axios says CEO Alexander Ljung infers in the memo that if the proposal is rejected, SoundCloud's ability to continue would be "a going concern". Return backers would include Union Square Ventures, Doughty Hanson and Atlantic Technology. DMN explains this as, "In the case of an eventual fire-sale or liquidation, Raine and Temasek would get to recover their funds first, along with any other investors participating in this "Series F". The initial investors would see their liquidity preference slashed by over 40 percent. "In the event that the transaction does not close and in the vent SoundCloud does not otherwise obtain additional funding, based on current cashflow forecasts, SoundCloud faces liquidity concerns in the near term", a note sent to SoundCloud investors is reported to have said.

If the deal goes through, former Vimeo CEO Kerry Trainor would replace founder and current CEO Alex Ljung, who will stay on as board chair, reports Recode based on documents now circulation to potential investors. (Ljung will still stay on as chair of the company's board.) Trainor would also bring in a new chief operating officer.



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