August 22, 2018

$7.1bn Slack valuation shows the surging demand for productivity technologies

By Lucy Ingham

The news that enterprise tool Slack has valued at $7.1bn (£5.6bn) in its latest funding round demonstrates the growing demand for productivity technologies, according to a leading investment firm.

“Slack’s latest valuation of £5.6bn, following its latest round of funding, demonstrates that there is a huge market for businesses looking to leverage the benefits of software and the cloud to improve productivity, foster creativity and bring together dispersed teams in real-time,” said Henry Alty, associate director at Livingbridge.

Slack is a cloud-based tool suite that is designed to enable increased collaboration among teams. It initially saw growth primarily through adoption by IT and development teams, but is increasingly being used in a host of different departments and industries.

According to Statista, as of May 2018 Slack has over 8 million daily active users, around 3 million of which pay for the service.

Its latest funding round, which saw the Slack valuation rise to $7.1bn, the company netted $427m, with key investors including Dragoneer Investment Group and General Atlantic.

This follows a $250m round in September 2017, where investment was led by SoftBank.

However, there is no word yet on an entry into the stock market.

“It will be interesting to see whether Slack chooses to continue as a privately held business as with other tech Unicorns, or if this is the precursor to an IPO or other corporate activity,” commented Alty.

Slack valuation will see more companies following suit

According to Alty, the valuation will prompt other software companies to produce cloud-based applications designed to streamline business processes.

“As Slack’s star continues to rise, amid the continued threat of Microsoft and its Teams product, other software companies will be looking to emulate Slack’s cloud-first business model and its product-focused lead generation approach,” he said.

“Applications which free up employees to collaborate in a more streamlined and creative fashion will continue to be a magnet for investment from venture capitalists and other tech companies.”

Growing trend for productivity technologies

Slack’s rise comes as businesses are increasingly turning to technology to improve productivity, with automation playing a vital role.

“Across the enterprise, we’re seeing more and more functions becoming automated by technological innovation such as Robotic Process Automation, which is moving repetitive, rules-based tasks away from people to machines,” said Alty.

“RPA and Intelligent Automation frees individuals to focus on what they’re good at – creativity, dependent on human-to-human collaboration and communication.

“Slack is a key enabler of this in the enterprise. Building an app ecosystem and integrations makes this far more than a simple work chat app.”

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GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.

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