Struggling SpiralFrog Raises $2 Million
SpiralFrog hasn’t been doing so well, but $2 million can heal a lot of wounds, and the ad-supported, Web-based music service has raised this amount in funding.
SpiralFrog is the company that intended to serve both consumers’ desire to get free songs and the music industry’s interest in making money. "Listen to a tune, then watch a commercial" is the basic idea. As Marshall Kirkpatrick recently noted, this approach lost the company $3.4 million in the third quarter.
So, on to the fresh infusion. SpiralFrog received $2 million "through the private placement of Senior Secured Exchangeable Notes," according to a formal release. "The Notes bear interest at 12 percent per annum, with interest payable quarterly, commencing January 1, 2008. The entire principal amount is due on April 19, 2008. The Notes are exchangeable into 2,325,582 common shares at the Exchange Price of $0.86, subject to certain adjustments."
Fascinating stuff, right? Or not. Either way, this isn’t the same thing as a well-known venture capital firm stepping up to support SpiralFrog. The company plans to expand its operations and acquire "additional content for the site," however, so we’ll see how things pan out in the first quarter of 2008.