SoundCloud silver lining as Doughty Hanson invests €2.5 million

In another example of counter-gloom investment, European VCs Doughty Hanson Technology Ventures has just announced a €2.5 million investment in SoundCloud, the web platform that allows music professionals to receive, send and distribute music over the internet.

This marks the first institutional round of funding for SoundCloud which from launch has been backed by seed funding from a variety of angel investors including music producer Chris Zippel.

Since launching in October 2008, the service has rapidly grown to 100,000 registered users.

What’s more it has a sound business model.  It offers a range of three monthly subscription levels Pro Max at €59, Pro at €29 and Pro Lite at €9 which include the ability to store unlimited numbers of tracks, sets and contacts.

The service also comes with ‘drop boxes’ which can be embedded on Facebook and elsewhere on the web to allow easy uploading of tracks.

For DJs, producers and record labels the service clearly fulfils a need, making it much simpler to move music around using a dedicated service for professional musicians rather than geeky FTP or file uploading alternatives.

If you want to understand what it is that attracts investors in a down market, you could do worse than pay attention to Stefan Tirtey of Doughty Hanson who joins the SoundCloud board:

SoundCloud has all the qualities we look for in a business: a solid product solving a real problem, a proven business model, and a capable and ambitious founder team.