The archive · Developer & Business Tools · Financial decision · 2013–2018
Slack raised $427M at a $7.1B valuation to fund its bet against Microsoft and Facebook
Workplace chat with 8M daily users and 70,000 paid teams raised $427M at over $7.1B post-money to keep an independent lead as Microsoft and Facebook moved in.
Slack
What the business is
Slack is a workplace communications platform that launched in 2013 and lets teams chat in channels while pulling data from hundreds of other work apps; it gives the service away free to teams and charges organizations that want history, administration and support.
Starting capital：Slack had raised $841M before this round from roughly 40 investors including SoftBank, Accel, Kleiner Perkins, GV, DST, Index, Andreessen Horowitz and Social Capital; the August 2018 Series H added $427M led by Dragoneer Investment Group and General Atlantic, with T. Rowe Price, Wellington Management, Baillie Gifford and Sands Capital joining.
How it started
Slack launched in 2013 and grew fast on the strength of an easy interface and integrations with nearly every work app. By August 2018 it reported more than 8 million daily active users and 70,000 paying teams. CEO Stewart Butterfield had long said the company raised opportunistically — it was already making money and held cash, but took funding at good valuations because, in his words, you never know what might lie ahead.
What happened
In September 2017 SoftBank led a $250M round at a $5.1B valuation. A year later the competitive stakes had climbed: Microsoft's Teams and Facebook's Workplace were chasing the same customers. Slack responded as a consolidator — buying up rivals such as HipChat — and pushing beyond small teams toward bigger enterprise accounts. On August 7, 2018 TechCrunch reported Slack was raising $400M+ at a $7B+ valuation; on August 21 Slack confirmed a $427M Series H at over $7.1B post-money, led by Dragoneer Investment Group and General Atlantic, with T. Rowe Price, Wellington Management, Baillie Gifford and Sands Capital joining.
How it ended up
The Series H closed at over $7.1B post-money on August 21, 2018, up from $5.1B eleven months earlier, with Slack reporting 8M+ daily active users and 70,000 paying teams. Slack remained independent, having ruled out an IPO for that year, and used the cushion to consolidate the market and chase enterprise customers while Microsoft and Facebook competed from above.
Background
Slack is the workplace communications platform that launched in 2013 and turned team chat into an ecosystem: conversations in channels, with hundreds of other work apps feeding data into the same stream. By August 2018 TechCrunch reported more than 8 million daily active users and 70,000 teams paying for it, built on an easy interface and integrations with just about every office tool.
The company's financing philosophy was unusual. CEO Stewart Butterfield said Slack raised opportunistically — it was already making money and had cash in the bank, but took venture money at good valuations because no one knew what lay ahead. That logic produced a SoftBank-led $250M round at a $5.1B valuation in September 2017 and, eleven months later, a confirmed $427M Series H at over $7.1B post-money.
The August 2018 round, led by Dragoneer Investment Group and General Atlantic with T. Rowe Price, Wellington Management, Baillie Gifford and Sands Capital, landed as competition sharpened. Microsoft had launched Teams and Facebook had Workplace, so Slack was consolidating instead — buying up rivals like HipChat and pushing beyond startups toward larger enterprise accounts, while ruling out an IPO for the year.
What has to be true
- Slack's integrations and bottom-up adoption made it the default layer where work conversations happened, giving it leverage even without owning the broader enterprise suite.
- Raising opportunistically while profitable let Slack bank a valuation jump from $5.1B to $7.1B in eleven months without a liquidity crisis forcing the terms.
- Microsoft Teams and Facebook Workplace made scale a survival question, and the cash bought consolidation (HipChat) plus a push into Fortune-500-class customers.
- Public-market pressure was deferred — Slack ruled out an IPO for 2018 — so a giant private round was the cheapest way to fund a fight it expected to last years.
What can be applied
Free, bottom-up adoption can build a $7B+ category leader, but staying there against bundled giants depends on using each opportunistic raise to consolidate rivals and sell upward into the enterprise.
Aftermath
As of August 21, 2018, Slack had closed a $427M Series H at a post-money valuation over $7.1B, with more than 8 million daily active users and 70,000 paying teams, and roughly $1.27B raised in total across rounds. It remained independent and had ruled out an IPO for that year, while using its capital to consolidate the market — it had bought up rivals such as HipChat — and to move upmarket toward bigger enterprise customers. Whether Slack's standalone platform could hold off Microsoft's Teams and Facebook's Workplace was the open question the round was designed to fund.
Sources
- Slack confirms it has raised $427M at a post-money valuation of over $7.1B
- Slack confirms it has raised $427M at a post-money valuation of over $7B — Hacker News
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