Struggling Music Service SoundCloud Raises $70 Million in DebtBy
Ares Capital, Kreos Capital and Davidson provide credit
Company will use funds to become ‘financially sustainable’
SoundCloud Ltd., the popular but financially struggling online music service, said it has received $70 million in debt to fund growth plans.
SoundCloud, which earlier this year warned it may run out of money if it didn’t attract more paying customers, said it had secured the credit line from Ares Capital Corp., Kreos Capital and Davidson Technology. In a statement, the company said it would be used for developing technology and hiring "while building a financially sustainable platform."
Berlin-based SoundCloud’s decision to take on debt comes after the company pursued other avenues, including raising additional funds from investors or selling the company. Talks to sell to Spotify Ltd. fell apart last year, a person familiar with the matter has said.
With roughly 175 million registered users, SoundCloud is one of the world’s most popular music platforms, favored by aficionados and those who enjoy its mix of user-generated content, dance mixes, podcasts and other tracks. The company has struggled to transition that popularity into a business. A subscription service it introduced last year to compete with Spotify and Apple Inc. hasn’t gained much traction.