Slack valued at $2.8 billion barely a year after launching publicly

Image: Tobias Hase/Corbis

Slack just blazed its way to a multi-billion valuation.

The workplace communication and collaboration service confirmed on Thursday that it has raised another $160 million in funding at a post-funding valuation of $2.8 billion, more than doubling its valuation in a matter of months. The latest financing comes from a host of new investors, including Horizons Ventures, Index Venture and Spark Capital.

Slack, which was founded in late 2013 and launched publicly early the following year, raised $120 million in funding last October at a valuation of $1.12 billion. It doesn't really need any additional funding though: Slack still has the vast majority of that money sitting in the bank.

"It's just to hoard the cash while we can get it," Stewart Butterfield, Slack's cofounder and CEO, said in an interview Thursday when asked directly. "But I have a better way of saying that."

Butterfield, who previously cofounded and sold Flickr to Yahoo in 2005, says the current climate for fundraising is better than any point in his 20-year career in technology, and perhaps better than any period ever. "This is literally the best time ever to raise money," he said.

At some point, all that money Slack has raised may go toward marketing or significant acquisitions. But for now, he's willing to wait and hold on to the money for "hedging against a downturn."

"The same dynamic that makes it easy for us to raise money makes it easy for everyone else to raise money, which drives up valuations," says Butterfield, in reference to possible acquisitions. "That makes everything more expensive, but we have a very long perspective on this. The conditions could change rapidly or they could change very slowly."

Even without spending heavily on marketing or acquisitions, Slack has grown to 750,000 daily active users, more than twice what it had at the beginning of this year.

Butterfield doesn't rule out raising more funding in the near future if the opportunity was right, at one point joking that he'll be speaking with this reporter again in another six months. "It's probably not going to happen, but if it does, oh well: that's not a bad outcome either."

There are limits to what Butterfield and Slack would accept from investors, however.

"If it was offered at a $10 billion valuation, that would strain the credulity of potential employees and acquisitions," he says. What matters most to Slack is making sure employees, customers and investors know the startup is in it for the long haul. "If [the valuation] gets completely out of hand, that perception kind of inverts."