2017 is shaping up to be a difficult year for SoundCloud. Several months ago, Spotify walked away from SoundCloud acquisition talks. In fact, SoundCloud co-founder Alexander Ljung all-but-confirmed bankruptcy rumors. He even admitted that the company may go bankrupt should their GO subscription service fail to take off.
“SoundCloud may run out of cash earlier than December 31, 2017… These matters give rise to a material uncertainty about the Group’s ability to continue as a going concern.”
Add even more bad news. Financial Times reports that the German streaming service just lost two key executives. Marc Strigel, the company’s COO, and finance director Markus Harder have resigned.
The company quickly downplayed the high-profile exits. Without giving specific details, a spokesperson told FT,
“After five or so years, they felt it was time to move on to new adventures.”
The sudden (read: abrupt) exits come as the Berlin-based streamer prepared a new wave of fundraising. Once again downplaying the exits, a spokesperson said,
“SoundCloud is currently fundraising, which is typical of most startups of our size and in our phase of growth. This [exits] is unrelated to our ‘normal course’ fundraising efforts, which are being led by our recently appointed Chief Financial Officer [Holly Lim.]SoundCloud remains in a position of strength and is confident in its long-term prospects as it continues to be the go-to platform for the creative community.”
Investors, however, painted a clearer picture of what’s going on inside the company. After refusing to provide the company with additional funds, an anonymous German financier told FT that SoundCloud is “begging for money.” He said that the company needs to rethink their $700 million valuation and settle for a lower amount.
The Berlin-based company quickly denied the desperation rumors. Yet, the high-profile exits, and the new (read: hasty) fundraising rounds underscore SoundCloud’s poor position in the music streaming market. The company has yet to turn a profit, and 2015 losses amounted to €51 million (or $54 million).
The service currently boasts over 200 million creators and 135 million tracks, most from new artists. After winning a Grammy, Chance the Rapper thanked SoundCloud.