Slack, the workplace messaging company, has hired investment bank Goldman Sachs to run its IPO next year, according to a Reuters report. Reuters sources say the company expects to get a valuation of “more than $ 10 billion.”
The WSJ reported in September that Slack was “actively preparing” for an IPO in the first half of next year, with a view to going public from the first quarter. He also said the company thought it could achieve a valuation well above the $ 7.1 billion that was last allocated by private market investors.
Slack, which is based in San Francisco and Vancouver, revealed in May that it had 8 million daily active users. At the time, it said that 3 million of its users were also, crucially, paying users.
In August, when the company announced its most recent funding round of $ 427 million, it told the New York Times that it still had eight million daily users, although it noted that it only had half that amount in the summer of 2017.
Slack investors include SoftBank Group Vision Fund, Dragoneer Investment Group, General Atlantic, T. Rowe Price Associates, Wellington Management, Baillie Gifford and Sands Capital, with much earlier investment coming from Accel Partners and Andreessen Horowitz (a16z).
In fact, when Accel and a16z funded Slack, it was technically a different company, one called Tiny Speck, and they worked long and hard on an online multiplayer game called “Glitch” that failed to get enough user traction to continue.
It was only in the process of unwinding the company that founder Stewart Butterfield came up with that the messaging infrastructure he had created to communicate privately with Tiny Speck engineers and other employees could be an even more promising idea.
Butterfield had discussions with these early investors about the return of their capital as he prepared to change course. As Accel’s Andrew Braccia told us several years ago, “We had a discussion about ‘I should pay the money back.’ But, Braccia said, “I told Stewart, ‘If you want to continue being an entrepreneur and build something, then I’m with you.’
It was a smart move on the part of Braccia, who spent nine years at Yahoo as vice president before joining Accel and met with Butterfield after Butterfield, with co-founder Caterina Fake, sold his Flickr photo-sharing business to the company.
It was also a huge leap of faith, based only on Butterfield’s potential. “I don’t think we understood how valuable, important or fast it would grow,” Braccia admitted during that sit-in several years ago. “We just knew that the use case was really strong in Tiny Speck and that if it was strong there, maybe it would be strong elsewhere as well.”
Slack’s thousands of customers include Airbnb, Time, Samsung, and Oracle, and you have reason to think that it will be well received in the marketplace, judging by its popularity with those users and the performance of many other subscription-based business software companies for goes public in 2018, including Dropbox, Zuora, and DocuSign.
That said, the market may well be changing, judging by the recent performance of the US stock markets. Stocks fell sharply today, limiting what has been a shaky week for Wall Street. In fact, a disappointing jobs report and strained trade tensions between the United States and China appeared to be largely responsible for sending the Dow Jones Industrial Average so low that it erased its earnings for the year.