Messaging start-up Slack forms $80 million venture fund

Slack Technologies, a Silicon Valley darling that’s raised more than $300 million, wants to give some of that money back.

The start-up, which runs a popular corporate chat service, is forming an $80 million venture fund to invest in other start-ups.

Stewart Butterfield, chief executive officer of Slack, said his company is contributing more than half of the total fund.

The rest will come from some of Slack’s own backers. The fund will invest about $100,000 to $250,000 in smaller start-ups building applications that work with Slack’s messaging service, Mr Butterfield said.

While Slack has been valued at $2.8 billion, it’s unusual for such a young company to fashion itself as a corporate investor.

The company’s main product, which lets businesses create chat rooms, share files, and send animated GIFs, is just two years old.

Mr Butterfield has talked publicly about how easy it’s been for the company to raise capital so much so, apparently, that it’s committed more than $40 million to investing.

Corporate venture has been driven primarily by larger companies. The most active players are tech titans, such as Google, Intel, Salesforce. com, and Qualcomm.

In 2014, corporate venture accounted for 11 per cent of all venture dollars invested, the most since 2000, according to the National Venture Capital Association.

Traditional corporate venture firms often use investments as a way to explore potential acquisitions, but Slack may take a different approach.

The company, which has made two acquisitions in its lifetime, isn’t focused on developing a list of companies to buy one day, Butterfield said.

”We can’t preclude the possibility that we would ever acquire someone we invest in, but that’s not the point,” he said.

“Hopefully, we actually make some money on our investments.”

Instead, Mr Butterfield said the purpose of the fund is to show that viable businesses can be built on Slack’s platform.

The Slack fund's backers include Accel Partners, Andreessen Horowitz, Index Ventures, and Kleiner Perkins Caufield and Byers.

Bloomberg