Soundcloud’s fate lies in the hands of its investors, as the company faces possible termination if its investors choose not to vote for a rescue funding round. With the company laying off 40% of its staff last month, the future does not seem too bright for the once revered music streaming site.
Soundcloud promotes independent music artists and their work, hosting hundreds of thousands of voices from around the world, but its leadership and lack of direction has put its success on hold in recent months. The company is currently asking investors for “$169.5 million at a pre-money enterprise valuation of just $150 million,” according to Axios’ business editor Dan Primack. Its valuation has dropped dramatically as it was once valued at $700 million in previous funding rounds.
CEO Alexander Ljung is stubbornly trying to keep the startup independent, but the company is running out of options if they do not receive the necessary funding. If the company does not get bought out or receive new funding, its massive archive of music files and artists will diminish.
Additionally, if Soundcloud does land a new funding deal, Ljung will step down as CEO and Recode reports former Vimeo CEO Kerry Trainor would be his replacement.
The cause of failure can be pointed at the lack of leadership and instability within the company. They’ve spent a great sum of money on offices around the world, hired more employees than they could afford, and as a result, were forced to layoff 173 employees last month. According to sources, the staff members that remain are extremely unhappy with the current state of the company and have even claimed some of their peers are using Spotify. The lack of drive and motivation explains why the company is in the state it’s in, and it’s obvious they will need more than just money to resolve their issues. Potential investors view Soundcloud as more of a liability than an actual profitable investment because of the internal conflicts they are experiencing.
There remains a small window of hope for Soundcloud if it can manage to get investors onboard, but if they fail to do so within the next couple of days, they may have to pack their bags and it will inaugurate a loss for many independent music artists around the world.