Slack Raises $120 Million, Now Worth $1.2 Billion

October 31, 2014

Vancouver-born Slack confirmed today that it has raised $120 million in new investment, for a post-funding valuation of $1.12 billion.

The round was co-led by Kleiner Perkins Caufield & Byers and Google Ventures with the participation of all existing institutional investors and a few new ones, including Yammer founder and former PayPal COO David Sacks. The company plans to use the new investment to aggressively market the product as well as fund international expansion and strategic acquisitions.

Slack previously raised $60 million from Andreessen Horowitz, Accel Partners and The Social+Capital Partnership.

Launched publicly in February 2014, Slack is used by 30,000 active teams to send 200 million messages each month. The growth to date has been entirely organic; the company has yet to hire any sales or marketing staff. Driven by recommendations from existing users and near-perfect retention rates, Slack’s growth has resulted in high conversion to paid tiers: more than 73,000 of its daily active users are paid.

“The world is in the very early stages of a 100 year shift in how people communicate, and we’re determined to push the boundaries,” says Stewart Butterfield, Slack CEO and cofounder.

“As the leader of a brand new product category, we have a huge advantage right now. These next 6 to 18 months are going to be critical for growth and this funding round gives us unlimited flexibility to ensure that Slack’s momentum will continue to pick up steam,” he added.

Slack’s goal is to become “the bottom layer of the business technology stack.” In addition to the core messaging product, which allows for simple group and one-on-one communication, Slack offers a robust API and integrates directly with 60 other business services to bring all communication into one place.

Slack’s customers list is a who’s who of the technology industry, but the product is also extremely popular in media, creative industries, professional services, and is quickly becoming mainstream across all kinds of teams of knowledge workers.

With this investment, John Doerr general partner of KPCB, and M.G. Siegler, general partner of Google Ventures will join Slack’s board of directors as observers. The current board of directors consists of CEO Stewart Butterfield, Andrew Braccia (Accel), John O’Farrell (Andreessen Horowitz) and Mamoon Hamid (Social+Capital).

“Never before have we witnessed so much user love for an enterprise software platform,” says Doerr. “Slack puts all of your team’s communications in one place, instantly searchable and available wherever you go. Life is a lot better with less email.”

Slack has already experienced very strong revenue growth, adding over $1 million in annual recurring revenue each month at current rates. It is expected that it will be the fastest-ever SaaS company to reach $10M in ARR.