The archive · Consumer Apps · Strategic decision · 2007–2020
SoundCloud survives near-death, raises $75M from SiriusXM
The "YouTube of audio" nearly died in 2017, then rebuilt on creators and ads to a $200M run-rate and a $75M SiriusXM investment by Feb 2020.
SoundCloud
What the business is
SoundCloud is a music streaming platform built on user uploads — the "YouTube of audio" — where 25 million creators publish tracks heard by listeners in 190 countries; it makes money from advertising, including a Pandora/SiriusXM ad-sales partnership, and from paid tiers.
Starting capital：$75M minority investment from SiriusXM announced 2020-02-11, on top of roughly $404M raised before it; PitchBook's last recorded valuation was $500M in 2017.
How it started
Founded in Berlin in 2007 by Alex Ljung and Eric Wahlforss, SoundCloud was an early mover in streaming alongside Spotify and rode viral popularity as the "YouTube of audio." Twitter pursued it in 2014 and Spotify in 2016, but the talks never closed, partly over asking price and the overhang of licensing and business-model problems.
What happened
After raising about $404M, SoundCloud came close to running out of money: in 2017 it cut 173 jobs and closed its San Francisco and London offices, founder-CEO Ljung stepped down during an emergency raise (staying chairman), and Wahlforss left in 2019. It went quiet but kept growing — CEO Kerry Trainor cited three consecutive years of strong financial performance, and Q4 2019 hit a $200M forward revenue run-rate for the first time, helped by Pandora reselling SoundCloud's ad inventory. On 2020-02-11 Pandora's owner SiriusXM announced a $75M minority investment tied to that ad partnership; the companies said they reach 100M unique US listeners together.
No ending yet — it is still running.
Background
SoundCloud, founded in Berlin in 2007, built music streaming around user uploads and became known as the "YouTube of audio" — 200M+ tracks from 25M creators reaching listeners in 190 countries. The problem was never audience; it was licensing and monetization, the same costs that squeezed every streaming company, and they nearly killed the company after roughly $404M raised.
Twitter's 2014 interest and Spotify's 2016 talks both collapsed without a deal, so independence was the only path. In 2017 SoundCloud came close to running out of money, cut 173 jobs, closed its San Francisco and London offices, and replaced founder-CEO Alex Ljung with Kerry Trainor during an emergency raise.
The quieter company then compounded: Trainor cited three consecutive years of strong financial performance, Q4 2019 delivered a $200M forward revenue run-rate for the first time, and Pandora began reselling SoundCloud's ad inventory. On 2020-02-11 Pandora's owner SiriusXM announced a $75M minority investment tied to that ad partnership, with a combined 100M unique US listeners.
The round bought SoundCloud more time and strategic buy-in rather than an exit; the article reports no acquisition talks, leaving the creator-led bet still open as of the announcement.
What has to be true
- SoundCloud had genuine audience: 200M+ tracks from 25M creators in 190 countries, and artists like Billie Eilish and Post Malone debuted there — but user love did not solve licensing or monetization.
- Exit talks failed twice: Twitter in 2014 and Spotify in 2016 never closed, over asking price, licensing and business-model overhang, leaving independence as the only route.
- The 2017 emergency proved the model had to change: after roughly $404M raised, SoundCloud cut 173 jobs, closed its San Francisco and London offices, and replaced its founder-CEO to survive.
- The pivot that worked was creator-led growth plus ads: three consecutive years of strong financial performance and a first-ever $200M forward revenue run-rate in Q4 2019.
- SiriusXM's $75M minority stake came with Pandora reselling SoundCloud's ad inventory — strategic revenue help rather than plain cash — and bought more time without an exit.
What can be applied
Viral creator love never paid licensing bills; the fix was a strategic investor who was also its ad-seller — capital plus distribution beat another venture round.
Aftermath
As of 2020-02-11 SoundCloud was still independent, had just taken SiriusXM's $75M minority investment, and was framing itself around a creator-led growth strategy with a $200M forward revenue run-rate; the source material records no exit and ends at the announcement.
Sources
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