According to the director of an investment bank, the new valuation is symptomatic of how software using the cloud to support productivity is creating a “huge market”. He speculated that others may follow into this space.
Slack has announced an additional $427 million investment, taking its post-investment valuation to more than $7.1 billion. The equity round is in addition to the $841 million previously raised.
Lead investors are Dragoneer Investment Group and General Atlantic, joined by funds and accounts advised by T. Rowe Price Associates, Inc. and funds advised by Wellington Management, and Baillie Gifford and Sands Capital, as well as existing investors.
Slack says that it now has more than 8 million Daily Active Users (DAUs) and more than 70,000 paid team, but says that there is still “enormous potential to change the way people and organisations collaborate and work together.”
According to Henry Alty, Associate Director, of investment bank, Livingbridge, the announcement “demonstrates that there is a huge market for businesses looking to leverage the benefits of software and the cloud to improve productivity, foster creativity and bring together dispersed teams in real-time.”
He added: “We’re seeing more and more functions becoming automated” across the enterprise.
Mr Alty said that Slack is a key enabler, within the enterprise, of technological innovations such as Robotic Process Automation – RPA. This involves moving repetitive, rules-based tasks away from people to machines, “freeing individuals to focus on what they’re good at – creativity, dependent on human-to-human collaboration and communication.”
He predicts, that applications “which free up employees to collaborate in a more streamlined and creative fashion will continue to be a magnet for investment from venture capitalists and other tech companies.”
This opportunity will create competition too and Mr Alty warned that other software companies “will be looking to emulate Slack’s cloud-first business model and its product-focused lead generation approach.” It already faces formidable opposition from Microsoft and its Teams product. In July, Microsoft introduced a free version of Teams, which was reported to have more features than the free version of Slack.
Mr Alty concluded: “It will be interesting to see whether Slack chooses to continue as a privately held business as with other tech Unicorns, or if this is the precursor to an IPO or other corporate activity.”
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