Not only have they grown fast, they also just raised €2.5 million (roughly $3.3 million) in about 4 months. When we met SoundCloud at Le Web last December they were just starting to talk to VCs. Just last Thursday they signed the papers for the €2.5 million, which should give them a run way of roughly two years.
It also seems that SoundCloud is all the rage at The Next Web Conference and one of the hottest startups present based on the number of interviews co-founder Alex Ljung is doing. I talked to Alex at the venue about SoundCloud and the experience so far. He told me about the process of raising venture capital in the current economy, what they want to do with the money and how it all got started with SoundCloud sometime in 2006 in Stockholm, Sweden.
When asking Alex how he liked the process of raising venture capital he laughed and said he didn’t, and that it is “Hard as hell”. A long and tedious process, but very rewarding once you pull it off. He told me that he pitched their presentation a ridiculous number of times to the VCs and even though SoundCloud had all the needed elements in place -a solid team, a very fast growing user base and a model where they started charging money for the product from day one, it was still very very hard.
The €2.5 million they raised all from Doughty Hanson Technology Ventures will go mainly into 1) expand the number of employees, 2) extend and improve the product with new features and 3) expand into other markets. Oh, and pay themselves
According to Alex, they are thinking of taking the company from what is now seven people to twelve or thirteen people by the end of the year. Alex also asked me to tell they are currently looking for great developers, music lovers, community managers and over all great people, so do get your CVs ready. Once they have written the job descriptions they will be posting them on ArcticIndex Job board.
As the founders are naturally very much product guys, the money will also be used to ramp up the business side of things. This will also include starting to expand into new markets. Currently US is the biggest market for SoundCloud, UK second followed by Germany and Italy.
When the founders had an idea what they wanted to build, their approach of choosing where to physically set up the company was rather unusual one. They systematically went through all the options for a good location starting from San Francisco, but finally settling for Berlin because of the vibrant tech music scene which is clearly crucial in building a great product from the idea they had. Not everybody have this option be it due to family reasons or otherwise, but SoundCloud has shown it can be done and it works.
Photos by Eric Wahlforss and Giant Steps