Here are the VCs getting huge paydays, again, because Salesforce is buying Slack for $27.7 billion

  • After Slack went public last year, a few of the VCs who funded it when it was a private startup held onto a chunk of their shares.
  • And they will be rewarded handsomely now that Salesforce has agreed to pay a premium and buy Slack for $27.7 billion.
  • The investors who stand to benefit include Chamath Palihapitiya and Accel's Andrew Braccia.
  • Visit Business Insider's homepage for more stories.

Salesforce chief Marc Benioff has called his company and Slack "a match made in heaven."

And if Salesforce's purchase of the popular work-chat app for $27.7 billion passes regulatory muster, their union should make some major Slack investors very happy and über rich.

Many of them are the kinds of institutional investors that often own large chunks of newly public tech companies, such as T.Row Price, Vanguard, and BlackRock. 

But a number of them are VCs who first bought in when Slack was a private rising-star startup yet didn't fully cash out after it went public, as VCs often do so they can return profits to their own shareholders.

Chamath Palihapitiya, a long-time startup investor, had more than 9 million shares of Slack as of December, 2019, according to shareholder data compiled by Bloomberg.

Those shares mostly belong to his investment firm, Social Capital, but because Palihapitiya has said he's one of the biggest investors in his own funds, he should profit handsomely from Slack's sale. In 2019, when Slack went public through a direct listing, Social Capital sold 1 million shares for more than $39 million, according to a SEC filing.

Now, Palihapitiya has a second payday coming because of his outstanding shares. 

On Tuesday, Salesforce said Slack shareholders will receive $26.79 in cash and 0.0776 shares of Salesforce common stock for each Slack share. Salesforce shares closed at $241.35 on Tuesday, so that amounts to about $45.51 a share.

Palihapitiya's stake could be worth $684 million when the deal closes, which is expected to happen by July, 2021, if Salesforce's share price holds.

Then there's Andreessen Horowitz, the A-list Silicon Valley firm that bought into Slack at the seed stage and increased its stake as Slack raised more money. The firm had nearly 7 million shares of Slack as of March, after it sold off about 60% of its holdings. That remaining stake could be worth $493 million at a value of $45.51 a share.

Accel was once Slack's largest shareholder with a 24% stake in the company. After selling off most of its shares in the direct listing and the quarters that followed, it still has 5.5 million shares of Slack across multiple funds, according to data compiled by Bloomberg.

Those shares could be worth $401 million, should that $45.51/share deal value hold.

Accel partner Andrew Braccia, who is on Slack's board of directors, also owns 491,000 shares of Slack, which have a potential value of $35 million.

But Accel and Andreessen Horowitz aren't the only blue-chip VC firms poised to get rich off Slack's sale. IVP, a leader in late-stage investing, had nearly 1.6 million shares of Slack as of November. Its stake could be worth $114 million.

There is one firm missing out on Slack's acquisition payday. SoftBank sold its stake in Slack for more than $1 billion during the second and third quarters of this year, it told investors. SoftBank made a handsome profit but Slack's share price ranged from $25 to $40 in that period, which means the Japanese investor sold for less than the premium acquisition price that Salesforce is willing to pay.

Source: Read Full Article