SoundCloud Ltd is close to a deal to sell stakes in the company to a pair of private equity firms, according to people familiar with the matter.
Such an investment will help the beleaguered music-streaming service keep operating for the foreseeable future
The two firms would be acquiring stakes via separate deals, said the people, who asked not to be identified discussing private transactions.
The names of the interested parties or the sizes of the transactions could not immediately be obtained.
Combined, the two private equity firms would own a majority of SoundCloud, the people said, adding that while the talks are at an advanced stage, they could still fall apart.
A darling of the independent music scene, SoundCloud operates one of the most popular music services in the world, attracting 175 million users with rough cuts from famous artists and mixes from unknown DJs. Yet SoundCloud, founded in Stockholm and now based in Berlin, has failed to generate much money from those users or build a business that can sustain itself.
The company has been scrambling to secure additional funding before it runs out of money. SoundCloud laid off 40 percent of its staff earlier this month, and shuttered offices in San Francisco and London.
The company lost 45.6 million euros (US$53.6 million) in 2015 on sales of 21.1 million euros, according to a regulatory filing earlier this year.
Spotify Ltd, another Swedish music service, generated more than US$2 billion in revenue in 2015 and US$3 billion last year, thanks to its growing base of paid subscribers.
Unlike rivals YouTube, Apple Music and Amazon Music, SoundCloud does not have a parent company that can depend on sources of profit outside the music industry. And unlike Pandora, the online radio service, SoundCloud has never built much of an advertising business.
SoundCloud introduced a subscription service last year to convince some of its most ardent users to pay a monthly free. The service also mollified many music rights holders upset at how little money SoundCloud returned to artists.
SoundCloud has previously spoken with rival music services Spotify and Deezer about a potential sale, Bloomberg has reported, but could not agree on a price.
Chief executive officer Alex Ljung has rejected the prospect of selling the company and would prefer to remain independent, the people said.
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