Spotify has raised $1 billion in convertible debt from private equity firm TPG Capital and hedge fund Dragoneer Investment Group, a spokeswoman for the music streaming service said.
The Wall Street Journal first reported the deal on Tuesday.
The deal is expected to close at the end of this week, Spotify spokeswoman Marni Greenberg confirmed to Reuters. Terms were no disclosed.
Spotify is facing increasing competition from companies including Apple Inc's Apple Music, Pandora Media Inc and newer rivals such as Europe's SoundCloud Ltd and U.S. music producer and rapper Jay Z's Tidal.
TPG’s growth arm, which specializes in growth equity and middle-market buyout opportunities, and special situations arm are investing in Spotify.
Earlier on Tuesday, SoundCloud launched a music streaming service in the United States starting at $9.99 per month.
(Reporting by Alan John Koshy in Bengaluru; Editing by Kirti Pandey and Cynthia Osterman)