The prognosis on SoundCloud, the popular but financially strapped streaming service, has been grim for all of 2017, with 40 percent of its staff laid off last week and statements from its founders that it may not have enough money to see it through the year. According to a report published Wednesday in TechCrunch, the company may not have enough money to see it through the summer.
According to the long and bruising report, a video conference was held Monday by cofounders Alexander Ljung and Eric Wahlforss to explain last week’s layoffs to the staff — and during the course of the otherwise largely uninformative meeting, the staff was told the company has only enough cash to last “until Q4,” which begins in 50 days.
A rep for the company had not responded to Variety’s request for comment at press time, but a rep told TechCrunch that, “We are fully funded into Q4,” adding that it is in talks with potential investors.
The report cited an unnamed staffer as saying that morale is “pretty sh–ty. Pretty somber. I know people who didn’t get the axe are actually quitting. The people saved from this are jumping ship. The morale is really low.” Staffers also questioned the wisdom of the company continuing to hire new staff only to lay at least one of them off, Vojta Stavik, as he was in the middle of moving to Berlin to start at the company.
The staff also questioned the wisdom of Ljung’s insistence on continuing to hire under the company’s dire financial circumstances. He replied that a hiring freeze would be a sign of weakness.
In March, the company confirmed the latest in a series of financial infusions, $70 million in debt funding from Ares Capital, Kreos Capital and Davidson Technology. However, it incurred a 51 million Euro loss in 2015 on revenue of 21.1 million Euros. In January Ljung expressed concern that “risks and uncertainties may cause the company to run out of cash . . . and would require [SoundCloud] to raise additional funds which are not currently planned” — concerns that were partially, although certainly not completely, allayed by the March debt-funding infusion. The company has also been hobbled by a long series of executive departures.
The new funding arrived after earlier reports that SoundCloud was considering a fire-sale exit because it hadn’t been able to raise the necessary money to continue its operations. It acknowledged the need for new capital, but denied that it was getting ready to sell for pennies on the dollar. “We are actively speaking with a variety of potential investors and other strategic partners,” SoundCloud told Variety at the time.
SoundCloud had raised $70 million from Twitter in June of 2016, after raising another $35 million of debt financing in January of last year.
Source: Variety