Twitter's annual report says it has written off $66.4M of its investments in private firms, most likely related to rumored $70M investment in SoundCloud in 2016
Twitter's lost almost all of the money it had invested in SoundCloud, the company disclosed as part of its 2017 annual report Friday.
Context & Ripple Effects
When Twitter Ventures put money into SoundCloud in mid-2016 — sources pegged it at $70M in a round valuing the company around $700M — the bet looked like a hedge on audio's role in social distribution. The warning signs were already public: months earlier SoundCloud had filed results showing a $44.27M loss on just $19.7M of 2014 revenue, with its board forecasting it would need more capital through 2016.
The 2017 annual report now converts that thesis into an accounting fact: a $66.4M write-off of private investments, effectively a near-total loss on the SoundCloud position. Notably, SoundCloud itself later showed the business could improve — UK filings revealed 2018 revenue up 19% to roughly $127M with operating losses shrinking to $38.7M — but that recovery came too late for Twitter's carrying value.
First-order effects
- Twitter's shareholders absorb a near-total loss on the SoundCloud stake in the 2017 financials, with the write-off hitting reported earnings rather than sitting as an unrealized markdown.
Second-order effects
- The loss puts Twitter Ventures' diligence under scrutiny — the firm deployed $70M into a company whose own filings had already flagged deep losses and a need for fresh capital, raising the bar for future corporate venture bets.
Third-order effects
- Minority stakes by large platforms in private media startups are proving to be one-way doors: without an exit path, strategic investments convert into balance-sheet write-offs, widening the gap between what companies disclose about strategy and what shows up in the P&L.
The trend: Corporate venture investing by social platforms is colliding with illiquid private markets, where strategic audio bets increasingly end as write-offs rather than exits.