Soundcloud raised a total of $77 million to cover huge losses
New documents show that Soundcloud’s losses for 2014 surpassed $40 million, but the company covered its losses with a major addition to its war chest.
The Swedish music service is one of the most hyped companies in the music industry. A week ago, we reported that the company had taken a $35 million loan (article in Swedish), and landed a vital license agreement with Universal Music.
The company was founded in 2007 by Eric Wahlforss and Alexander Ljung, who were students at Swedens Royal Institute of Technology at the time. Since then, Soundcloud has moved to Berlin and currently has 175 million users.
According to the most recent available financial statement, the music startup’s losses grew fast in 2014 reaching €39 million ($44 million with today’s conversion rates). That is a 70 percent increase from 2013. In comparison revenues grew by 49 percent over the same time period, to $19 million up from $13 million. Increasing ad revenue in the U.S. has been the driving force behind the growth, according to the latest financial statement.
Breakit can now also reveal that Soundcloud during 2015 raised another $42 million to cover its expenses, in addition to the $35 million loan previously reported. The numbers has since been confirmed by the company in an email.
“We raised a total of $77 million last year. A part of it was from pre-existing investors, which is a testament to their firm belief in the company and its future, and the rest was a loan from Tennenbaum Capital Partners”, the company writes.
The $77 million dollars gives the company some well needed time to exhale after the huge losses in 2014. However, the financial statement also makes it clear that the company might need to raise even more capital within the coming 12 months.