Slack, the business messaging and workplace collaboration startup, is in talks to raise at least another $150 million in an up round, the Wall Street Journal reported. The new investment would put Slack’s valuation between $3.5 billion and $4 billion, Bloomberg said, up from its $2.8 billion valuation in April of last year after the close of its $160 million Series E round.
To date, Slack has raised roughly $340 million and is believed to be one of the fastest growing business apps ever. Since its 2014 launch, Slack has grown to 2.3 million daily active users, up from just 520,000 last year and the company said that it had more than $64 million in revenue in 2015. Last week, Slack CEO Stewart Butterfield said that 20 percent of Slack’s monthly active users were introduced to the app just this year and that he anticipates further growth as Slack becomes better known.
Slack hopes to continue that growth by accelerating hiring and spending on marketing, as well as by investing in startups built on the company’s messaging platform. In December, Slack announced plans to invest $80 million in startups building their businesses on Slack, following its October announcement that it was joining a fund begun by Slack investors Accel Partners, Andreessen Horowitz, Index Ventures, Kleiner Perkins Caufield & Byers, Spark Capital, and Social+Capital to invest in new apps and enterprise tools that are integrated with Slack. To date, that fund has invested in at least three companies: Howdy, which built a bot for Slack; Awesome, which helps to automate custom workflows within Slack; and Small Wins, a software startup that has not yet released its product, but whose team includes former Engadget editor, Ryan Block.
Butterfield said at CES 2016 that the company does not plan to go public for at least another year and a half because of it is “growing too fast” and because Slack has been able to continue to raise money from investors.
“If you can raise a billion dollars at a time on the private markets, there may be some discipline that you could enforce on yourself by going public, or there might be liquidity for people who aren’t going to get it in those private-market funding environments, but there’s not a whole lot of reason to go out and go public when you can raise hundreds of millions of dollars at a time,” said Butterfield.
The reported plans for a new funding round, less than a year after Slack achieved a $2.8 billion valuation, is evidence of the company’s continuing growth and investor confidence in Slack despite an overall market downturn for venture capital in the fourth quarter of last year with some investors warning about a bubble on the verge of a bursting.
In his view, Butterfield says that the market for VC funding is still good, though he acknowledges that the window of opportunity to raise money is shrinking.
“That window might be closing,” he said at CES. “It’s going to be awhile before it can close because so much money went into the VC funds over the last 3 or 4 years, and they can’t just not invest that…There’s no other exit, no other escape valve for the constraints in that formula. So there will be another XX tens of billions of dollars invested over the next couple of years because no VC fund is ever just going to go back to their LP’s and say ‘You know what, I couldn’t invest 75% of this fund and here’s your money back.'”