Slack, the enterprise collaboration platform co-founded by Stewart Butterfield of Flickr fame, continues to defy its namesake: we have heard from sources that the company is raising a new round of funding at a valuation of between $800 million and $1 billion, just six months after raising nearly $43 million.
The total raise is said to be eight figures, and Sequoia* and KPCB are participating, our sources tell us, although the company has been talking to multiple other VCs. The Information has also reported the rumors.
Asked for confirmation on the funding, Butterfield would not comment directly except to say that 2014 has been “crazy,” and that it would be very likely that his company would raise money some time “in the next six years.”
(Butterfield is known for his sometimes colorful ways with words.)
Slack — which lets businesses plug in various other apps and then aggregate progress feeds and previews together in one place — has been growing rapidly since launching at the end of 2013.
TechCrunch understands that the company is currently clocking up 250,000 daily active users, and that in its freemium business model, about one-third of its “seats” are paid. As a point of comparison, at the end of April the company had 60,000 daily active users and 15,000 paid seats.
It’s an unexpected successful turn for a platform that was created internally for Butterfield’s original company Tiny Speck so that staff based in different cities to communicate and collaborate on projects together. After its first product Glitch shut down, Tiny Speck seized the moment to see if its internal platform could fare as a product of its own.
Call it being in the right place (Silicon Valley is suddenly hot for API-based platforms) at the right time (a resurgence of interest in enterprise apps as they become less turgid and more consumer-design driven) but Slack has really taken off.
If the billion figure we’re hearing as Slack’s valuation is accurate, it represents a real milestone in the market for enterprise collaboration and communication platforms. Yammer sold to Microsoft in 2012 for $1.2 billion when it had 4 million users. When IBM acquired Lotus, makers of Lotus Notes, in 1995 for $3.5 billion, it was the highest price ever paid for a software company.
Slack’s not been without its own growing pains: witness the sign-on “feature” that let anyone see all the user groups created for each business (now removed).
And it has a lot of room to grow, with features like threaded comments and federated accounts, which cover multiple user groups from single companies, yet to be turned on.
Prior to this, Slack and its umbrella company Tiny Speck had raised $60 million, including funding for Slack’s predecessor, gaming company Glitch. Other investors include Andreessen Horowitz, The Social+Capital Partnership, Accel Partners, Yelp’s Jeremy Stoppelman, Squarespace’s Anthony Caselena, Stripe’s John and Patrick Collison, LinkedIn CEO Jeff Weiner, Google VP Bradley Horowitz, former Groupon COO Rob Solomon, and Twitter co-founder Biz Stone.
Update*: Butterfield denies raising any money, and the official Slack Twitter account has tweeted out the below. We’ve double-checked with our sources, and have heard that Sequoia did not formally engage with Slack, and is not participating as we originally reported. KPCB is in the round, we’re still hearing, in addition to other VCs including existing investor Accel.