SoundCloud has raised 300 million Swedish krona (the equivalent of around $35 million USD) in debt funding with Tennenbaum Capital Partners, according to Swedish news site Digital.
The report also indicates that SoundCloud has an option to borrow another 600 million Swedish krona (~ $70 million USD) through convertible bonds.
Tennenbaum Capital Partners is an American firm that specializes in both performing credit and ‘special situations’, according to its website, acting as an alternative investment firm.
A SoundCloud spokesperson offered the following confirmation to Tech.Eu:
We can confirm that we secured a flexible credit line with Tennenbaum Capital Partners (TCP) early in 2015. It’s an attractive option for companies like SoundCloud that have a solid credit rating, and offers an appropriate funding option for a company at our growth stage.
According to Crunchbase, SoundCloud’s most recent funding came back in January of 2014, with a $60 million Series D round led by Index Venture Partners and the Chernin Group at a $700 million valuation.
The evolution of the music industry, sparked by Napster and early music-sharing sites, has sped up since that last round of financing, with companies like Apple, Google and Amazon betting big on their own music streaming platforms. And let’s not forget Pandora and Spotify, with the latter boasting more than 70 million active users across 58 markets, and a library topping 30 million tracks.
But SoundCloud doesn’t suffer for lack of users. Bloomberg reported in July that SoundCloud has 150 million registered users. comScore also noted that SoundCloud’s younger audience has grown (in terms of traffic) over the last two years since May 2013.
It makes sense, considering SoundCloud’s dominance in the world of remixes and yet-unheard-of artists and tracks.
But monetizing that same young audience can be difficult.
SoundCloud hasn’t announced any revenue figures since 2013, at which point the company was seeing a $29 million loss on $14 million in revenues.
But in November, SoundCloud introduced a dedicated app for creators, and has recently debuted an ad-free subscription service to potentially spark more legitimate monetization.
The music streaming space affords very thin margins, and competition is fierce. But even in the face of adversity, SoundCloud offers a differentiated product from that of Spotify or Apple Music. Still, only time will tell if SoundCloud can turn this latest debt financing into a strong source of revenue.