On a week where the future of SoundCloud once again seemed uncertain, a new injection of cash seems to be the only thing keeping the beleaguered streaming giant alive.
The Hail Mary deal, reported by Vanity’s Senior Silicon Valley Correspondent, aims to safeguard the company’s financial survival and give it a fighting chance to pay down its debt. The deal sees the music platform receive nearly $170 million from the Raine Group and Singapore’s Temasek but comes with some serious sacrifices for existing investors.
Axios, who were the first to report on the new and needed cash infusion yesterday morning, also reported that some existing institutional investors will also participate in the new funding, which is set to close today.
The deal sees the new investors secure 50% of the company, with common shareholders including early employees coming out as the losers of the entire situation here. A source has reported to Variety that the latter will only receive 17% of any exit proceeds that exceed the new investment, plus the $70 million the company raised from Twitter in 2016. What does this mean exactly? Simply put, unless SoundCloud sells for more than $240 million at some point in the future some investors will be walking out with nothing.
Although the deal is not finalized yet, with shareholders needing to approve all its details still, it is expected to be a practical “done deal” with confirmation to arrive at some point today.