Slack looks to buck the down market, raise a big new round

The company is said to be raising between $150 and $300M at a $4 billion valuation

With the markets hitting the skids at the end of last year, and unicorns companies suddenly seeing their valuations slashed, the consensus wisdom has become that it's only going to become harder to raise money, especially big rounds, and most especially as big valuations. 

But who has ever gotten ahead by listening to the conventional wisdom?

Slack is going against the grain, and is looking to raise a new round of funding, between $150 million and $300 million, which would value it at $3.5 billion to $4 billion, according to a report out from Bloomberg on Wednesday.

The talks are ongoing, and a lead investor in the round has not been selected.

Slack has been one of the fastest rising companies in the last few years. It came out of nowhere to raise a $120 million round in October of 2014, suddenly becoming a unicorn. It then raised a $160 million roundin April of 2015, which valued it at $2.8 billion.

While that last fundraising was less than a year ago, market conditions have changed drastically since then. The fourth quarter of 2015 was the worst 

Venture capitalists invested $11.3 billion into 962 deals in the fourth quarter of last year, both down significantly quarter-to-quarter. Dollars fell 32 percent from $16.6 billion in Q3, and deals fell 16 percent from 1,149. The $11.3 billion is also down 28 percent from the $15.7 million invested in the fourth quarter of 2014. 

Investments in later stage companies, which includes Slack, were hit especially hard. They dropped 33 percent to $3 billion going into 169 deals in the fourth quarter. The average Later stage deal in the fourth quarter fell to $17.8 million, down from $20.9 million in the prior quarter.

So Slack may find it harder to find that funding than it did the last time it went looking. However, as Wes Selke is co-founder and Managing Director of Better Ventures, recently told me, despite the downturn, "good companies will still get funded."

Slack has been growing quickly, and its user numbers are impressive. The company had 1.7 million daily active users as of October, and 470,000 paid seats.

As of February, its DAUs have jumped to 2.3 million, a 35 percent increase, with 675,000 paid seats, an increase of over 43 percent. The company is obviously growing tremendously fast, and that might help make it the exception that proves the rule. 

When I reached out to Slack to confirm the reports of the new round, a spokesperson for company would only say, "Slack is doing well. There has always been a great deal of investor interest in the company and we expect that to continue. However, we have nothing to announce and nothing else to add at this point."

(Image source: slack.com)