SoundCloud is a leading online audio music distribution service, which allows users to create, upload and promote their original sounds with other users. Founded in 2007, the company has enjoyed an exponential growth, rising to become one of the leading digital audio platforms. On top of allowing users to distribute their music, SoundCloud also acts as a streaming service, where you can listen to your favorite type of music, and an online community, where users interact and share music with each other.
Despite all this success, SoundCloud is in a bit of a tight spot – various reports indicate that the company could be facing some serious financial problems. While the company is yet to confirm this, sources close to the company suggest that it might be running dangerously low on cash, and could be broke in a few months if additional funding is not secured.
The company has already begun securing additional funding with the introduction of the paid subscriptions. The subscriptions will add to the company’s revenue stream, which includes sponsorship programs with various companies and the fees paid for premium account features. However, if the additional funding secured from these streams are not enough, the next option for the company would be going public.
While the SoundCloud has been a bit cagey about such plans, there have been hints that it might be considering filing for IPO. If it decides to go public, there are a number of benefits that it can reap. These include:
– Improved financial standing – by filing for an IPO, SoundCloud will have access to funds that it does not have to repay. The money obtained can be used to pay existing debts, research and development or expansion.
– Increased publicity – the publicity generated by going public will increase the awareness of the company. This can bring new potential customers, increasing the revenue.
What disadvantages could the company face?
While there are benefits of filing for an IPO, there are also many challenges. For starters, there is a risk that the new shareholders will focus on short-term profits, which could affect the long-term goals of the company. Going public will also mean added scrutiny on the company, which might force it to change the existing culture. This could have detrimental effects on the success of the company.
Conclusion
There are many benefits that SoundCloud can get from filing for IPO. However, it will also bring various challenges that might affect its success. Before the SoundCloud decides to go public, it should consider other alternative sources of funding, for example, increasing their revenue streams and seeking additional private investors. If this fails to pan out, the company can then file for an IPO.
Have you seen this Soundcloud Video yet?