Butterfield says he was initially trying to raise only $100 million, but he saw so much interest that he ended up raising $120 million, with $200 million in commitments. In the end, if the investors and the company agree, that's what the company is worth.Īnd it looks like investors were lining up to invest in Slack.

Valuations are a tricky business, too, because they are based in part on how much money venture capitalists are willing to invest in exchange for how big of a chunk of the company they'll own. Slack is being valued based on its ability to make money rather than something more speculative,” Butterfield told us in a previous interview. “We’ve established that people would pay for us. That amount of revenue doesn't seem like enough to justify Slack’s billion-dollar valuation, but it does show that companies are willing to pay for its service. Based on those metrics, Slack would have made a little over $12 million last year. But it's a good indicator of a cloud software company's health since it represents the value of the total subscription contracts expected to recur for the next 12 months. Slack claims to be adding $1 million in annual recurring revenue (ARR) every month, with “near perfect” retention rates. That’s nearly 25X growth in just a year, all without any real spending on sales and marketing. Since its launch in February when it claimed to have 15,000 daily active users, Slack has grown to have 365,000 users. The issue: Slack is growing at such a fast rate that it's hard to come up with meaningful business projections. Account icon An icon in the shape of a person's head and shoulders.

Slack value