When it comes to success in the music industry, it all depends on the number of ears you can convince to listen.
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Case in point: Music creation platform SoundCloud has received a $75 million investment from audio company Sirius XM Holdings two years after it was notoriously just “80 days from shutting down.”
SoundCloud is a platform for individual audio creators to upload content, attracting the attention of average listeners like you and me, lesser-known artists and celebrities such as The Weeknd, Kehlani, and Lil Yachty (even before they got famous).
The company is a home for independent, unsigned artists, and like many social media platforms it creates the opportunity for one-time nobodies the possibility of going viral and making it big.
SoundCloud was founded in 2007 and claims it has over 200 million tracks from 25 million creators heard in 190 countries. The startup has over $500 million in funding to date, per its Crunchbase profile.
Sirius XM’s investment in the company will be used to work on “product development and enhance the services that fuel its global community of creators and listeners,” according to a release.
SoundCloud’s CEO Kerri Trainor also claims that, “three consecutive years of strong financial performance directly reflect the success of our creator-led growth strategy.”
SoundCloud’s growth is notable. According to the company, it has a $200 million revenue run-rate based on the financials of fourth-quarter 2019. For those that don’t know, run-rate is a metric that helps forecast the year-end revenue by multiplying the performance of one quarter. That said, it is often employed by younger companies, and SoundCloud is over 13 years old at this point.
To unpack how this company went from almost closing to its recent news, a look as today’s investor is telling. According to the company, an ad and sales partnership with Sirius XM subsidiary Pandora made the platforms the “largest digital audio advertising marketplace.”
“The agreement enables advertisers and brands to purchase SoundCloud’s U.S. ad inventory directly through Pandora, leveraging the company’s direct sales capabilities, targeting data, and audio programmatic platform,” per the release. The combined audience is more than 100 million unique active listeners, a spokesperson for the company told Crunchbase News this morning. For context–streaming platform Spotify has 271 million monthly active unique users according to its latest earnings report.
Beyond partnerships, there’s definitely other factors at play that propelled the company past its layoffs and shutdowns–including support and public rallying from Chance The Rapper, per a New York Times article.
But it was likely a huge cash investment of $169.5 million from The Raine Group and Temasek in 2017 that helped SoundCloud stay afloat. It also led Alexander Ljung, the founder and chairman of the company, to step down as CEO. This kicked off a companywide restructuring.
Per Ljung, the 2017 investment promised a musical future.
“This financing means SoundCloud remains strong & independent. As I said, SoundCloud is here to stay,” he wrote at the time.
Today’s minority investment will allow two board seats for Sirius XM.
Illustration: Li-Anne Dias
