Report: SoundCloud’s Future Will Be Determined By A Vote On Friday
The company is reportedly asking shareholders to consider an investment plan that would include Raine Group and Temasek as new backers.
Amidst recent reports that SoundCloud doesn't have enough funding to make it to the next quarter, Axios reports that the company is asking shareholders to consider a rescue investment plan before the end of Friday.
In a memo sent to shareholders earlier this week, and obtained by Axios, the company outlined a proposal that requires shareholders to accept or reject a reorganization plan, which seeks an additional $170 million in funding and values the company at $150 million. If the proposal is rejected, CEO Alexander Ljung said that the company would not be able "to continue as a going concern."
Under the proposal, the company's main investment would come from Raine Group and Temasek, while returning investors would include Union Square Ventures, Doughty Hanson and Atlantic Technology. Under the terms of the proposal Raine Group and Temasek would get preferential treatment in recovering funds in the case of liquidation. The initial investors would see their liquidity preference slashed by over 40 percent.
According to ReCode, SoundCloud's potential investors would like to replace Alexander Ljung with former Vimeo CEO Kerry Trainor as part of a new round of investment.
In July, SoundCloud laid off 173 employees and closed down their offices in San Francisco and London.
A representative for SoundCloud was not immediately available for comment.