$230 million in venture capital being injected into a company sounds great on paper, but news that SoundCloud laid off 173 employees and closed two offices in July quickly sent rumours whirling that the company was in dire financial straits, despite CEO Alexander Ljung initially denying the severity of things.
Axios have now gotten hold of an internal memo sent to shareholders on Tuesday, which basically says that they have to accept an investment proposition, and liquidity preference cuts, or the company will collapse.
The new investment will see Raine Group and Temasek pump $169.5 million into the company — which is said to be valued at $150 million, pre-investment — while initial investors will have their liquidity preference cut by more than 40%. This will allow the company to pay off its current debts.
If the shareholders choose to reject the proposition, Ljung warns the company will not be able to “continue as a going concern”, which doesn’t bode well for your unauthorised Rihanna remixes.