What's going on?
Slack Technologies, the creator of workplace collaboration software “Slack”, confirmed a $250 million fundraising round on Monday led by Japanese conglomerate SoftBank Group that values it at over $5 billion! (tweet this)
What does this mean?
Slack Technologies, which only released Slack about four years ago, is growing its revenue at more than 100% a year and makes more than $200 million in annual recurring revenue. With the $250 million raised in this latest fundraising round, it has raised a total of $841 million – which makes it one of the best-funded business software startups. The company’s valuation increased more than 30% from its $3.8 billion price tag in its last fundraising round (in April 2016)! However, it doesn’t seem like it actually needs all that money at the moment…
Why should I care?
For the stock: Slack Technologies is preparing a “war chest” of funds.
The funds raised in this round are intended for “operational flexibility” rather than for investment in a particular expansion plan, as is often the case with these funding rounds. In fact, Slack Technologies still hasn’t used any of the $360 million it raised in its last two rounds of fundraising. The money raised thus provides a safety net for the company in case fundraising becomes difficult in the future.
The bigger picture: SoftBank is putting its billions to work.
SoftBank’s investments (and planned investments) include Uber, WeWork, Deliveroo and many more. Their investments have typically been in the hundreds of millions and, in some cases, in the billions. Some of these investments are from SoftBank’s $93 billion Vision Fund (the world’s largest technology fund) that’s backed by Apple, Qualcomm and the Saudi and UAE sovereign wealth funds, among others. Billions pouring into the tech industry may well be seen as investors supporting innovation – or, as critics point out, may be a sign that investors are getting carried away.