Bad times for recruiters

Billion-dollar Sonos raises $130M to let employees cash in

Sonos has raised $130 million from investors, according to a FCC filing made public this week. A Sonos spokesperson confirmed the raise when asked about it this morning, but said that contrary to a TechCrunch report, the new money isn’t going towards expanding the company’s business: “The funding is just a secondary round strictly raised as a part of our ongoing liquidity program for employees not a new round of capital.”

In other words: Sonos investors decided to make some cash available in order to allow employees to cash in on some of their options, and in turn help the company retain talent. This kind of secondary funding isn’t that rare for large late-stage venture-funded companies. The benefit for institutional investors is that they don’t have to share a seat at the table with anyone buying stock options from employees through secondary marekts.

However, both timing and volume of the raise are significant: Sonos CEO John MacFarlane recently told us at our Structure Connect conference that his company is on its way to sell a billion dollars worth of connected loudspeakers this year.

At the same time, Sonos is facing increased competition from consumer electronics manufacturers, traditional Hi-Fi brands and startups, all of which are trying to get a piece of the connected audio pie. Some of these companies are likely looking to recruit talent from Sonos to better compete with the market leader. Sonos is obviously willing to give long-time employees some significant cash to hold onto its talent.

Check out Gigaom founder Om Malik interviewing John MacFarlane at Structure Connect below: