Social media giant, Twitter Inc. (NYSE: TWTR) invested $70 million in Music-Streaming Platform SoundCloud. Twitter has confirmed the news, but didn’t comment on the specifics of the investment.
Two years ago, there was news that Twitter was going to acquire SoundCloud, but ended up with Twitter walking away from the music-streaming platform. The social media giant finally bought part of SoundCloud instead. The $70 million investment in music service is part of the round that would end up in $100 million. SoundCloud is expected to be valued at around $700 million, which was the same as the valuation in 2014.
The investment will be helpful to both companies in solving their current problems. Twitter was having a hard time generating profits and adding new active users. In addition, Twitter shares decreased around 60% in 2015, and if the situation is not improved, the company will face the risk of being bought out by companies like Google (NASDAQ: GOOGL), Apple (NASDAQ: AAPL) and Facebook (NASDAQ: FB). SoundCloud also needed new funding in recent years. In 2014, the company raised $60 million and since then, it raised a debt round. For Twitter, this investment is a way for the company to increase growth and make the platform more attractive. And for SoundCloud, it could take advantage of Twitter to promote its subscription service.
“Earlier this year we made an investment in SoundCloud through Twitter Ventures to help support some of our efforts with creators. They’ve been great partners of ours over the years and their community-supported approach mirrors ours in many ways.” Twitter C.E.O. Jack Dorsey said, although he didn’t share the details of funding.
“We can confirm that Twitter has made an investment in SoundCloud. Both companies facilitate and inspire contemporary culture to happen in real time while reaching millions of people around the world. This investment will enable SoundCloud to remain focused on building value for creators and listeners alike, and to continue the global rollout of many company initiatives such as our recently launched subscription service, SoundCloud Go.” A SoundCloud spokesperson said in a statement.