Workplace chat app Slack raises $427m in financing

San Francisco-based start-up with an eye to being backbone to business valued at $7.1bn

Slack was co-founded by Stewart Butterfield. Photograph: Chris Goodney/Bloomberg

Slack was co-founded by Stewart Butterfield. Photograph: Chris Goodney/Bloomberg

 

Slack, the workplace chat app, has raised $427million (€374 million) in a financing round that gives it a valuation more than 40 per cent higher than its last fundraising under a year ago.

The San Francisco-based start-up is now valued at $7.1 billion, including the new capital, after raising more funds on the buoyant private market for technology companies rather than seeking an initial public offering.

In total, Slack has raised almost $1.3 billion to fuel its quest to become a backbone for businesses, replacing email with the social media-like app that integrates workplace software ranging from cloud storage to collaborative spreadsheets. 

US private tech companies have raised $19 billion in fresh capital so far this year, more than the total for last year, according to data from Pitchbook, a private-company research group. Slack follows in the footsteps of 78 Silicon Valley companies that raised rounds of more than $100 million in the first half of the year, according to research group CB Insights.

The latest round was led by Dragoneer Investment Group, a San Francisco-based investor, and growth equity firm General Atlantic. They were joined by funds advised by T Rowe Price and Wellington Management, as well as existing investors. Last year, SoftBank led a $250 million round as part of the Japanese technology conglomerate’s giant Vision Fund.

Slack has eight million daily active users, many of whom use the basic product for free, and 70,000 paying teams at customers including IBM, eBay and BuzzFeed. 

Alan Tu, equity research analyst at T Rowe Price, said Slack made “strong progress” in a short time. “Our investment represents our belief in the company’s vision and leadership team, together with the product’s potential to increase productivity and change the way people work on an even larger scale,” he said. 

The group was co-founded by Stewart Butterfield – who previously co-founded photo site Flickr and sold it to Yahoo in 2004 – and Cal Henderson, who was a senior leader at Flickr. It now employs more than 1,000 people in eight offices worldwide. 

A Slack spokesman said the company pursued investment to give it resources and flexibility to evolve the business and “take advantage of the massive opportunity in front of us”.

Slack did not disclose recent revenue figures but the company said last year it had hit annual recurring revenue of $200 million and was growing at 100 per cent a year. – Copyright The Financial Times Limited 2018