SoundCloud’s investors just approved a life-saving $170 million emergency fund. Here are all the details.
SoundCloud just bought a few more months of life. But existing CEO Alex Ljung will no longer be running the show.
The emergency funding was given the green light this morning, according to details confirmed by company investors to Digital Music News. As reported on Thursday, incoming investors The Raine Group and Temesek led the emergency round, though they demanded preferential terms.
This is a risky bailout, so special demands are in order. Specifically, Raine and Temesek will receive first dibs on cash if SoundCloud gets sold, liquidates, or implodes. Those are all very real possibilities.
Leading up the vote, CEO Alex Ljung was urging former investors to vote ‘yes’. They did that — but they also voted ‘no’ on Ljung.
Accordingly, Ljung is being slotted into a ‘Chairman of the Board’ role. Sounds like a soft transition out of power, which raises a range of additional questions. At this stage, it’s unclear if Ljung will play an active role in the future direction of the company.
Either way, Ljung is playing along, while heralding the successful round and a bright future. But many point to Ljung as the culprit.
Indeed, as SoundCloud burned, Ljung has been blasted for wasting money and partying like a rock star. That included lavish offices, outrageous perks and scant strategies for monetization. Meanwhile, more focused companies like Spotify, YouTube, and Apple have been eating SoundCloud’s lunch.
Perhaps it’s time for some adults to assume control. And, determine a tangible, effective plan of action. Accordingly, replacing Ljung will be former Vimeo CEO Kerry Trainor. Mike Weissman will become COO.
CTO Eric Wahlforss is also moving.
Instead of CTO, Wahlforss will become ‘Chief Product Officer’. But that just creates another elephant in the room. After all, why weren’t Ljung and Wahlforss flat-out removed? Especially given the massive issues plaguing SoundCloud under their leadership?
Even worse, SoundCloud’s bailout package seems to be rewarding Ljung and Wahlforss with ongoing salaries.
Here’s a statement issued by SoundCloud to Digital Music News this morning.
“SoundCloud, the world’s largest music and audio platform, announced today it has reached an agreement on a significant investment from global merchant bank The Raine Group and Singapore-headquartered investment company Temasek. In connection with the investment, veteran digital media operators Kerry Trainor and Michael Weissman will join the SoundCloud team respectively as Chief Executive Officer and Chief Operating Officer.”
More as this develops.