Slack Is Said to Be in Funding Talks at $2 Billion-Plus Value

Slack Technologies Inc., whose software helps people collaborate at work, is in talks with investors to raise financing at a valuation of more than $2 billion, according to people with knowledge of the matter.

The funding round hasn’t yet closed, and the size and terms of the deal may change, said the people, who asked not to be identified because the talks are private. A representative of the San Francisco-based company declined to comment.

In October, Slack raised $120 million in a round of financing co-led by Kleiner Perkins Caufield & Byers and Google Ventures, valuing the company at $1.12 billion.

The investments are a further validation for Stewart Butterfield, who co-founded Tiny Speck Inc. and raised $17 million to develop an online game called Glitch. Tiny Speck had $5 million left when in 2012 Butterfield and the founders decided to shut down the game and return cash to stakeholders. Instead, their investors encouraged them to keep the money and start a new business, which became Slack. Butterfield had previously sold photo-sharing website Flickr to Yahoo! Inc. in 2005.

More than 50 U.S. technology companies reached a valuation of at least $1 billion in the past two years, according to CB Insights. Other startups such as Airbnb Inc. and Snapchat Inc. have surpassed a $10 billion valuation, while Uber Technologies Inc. has reached $40 billion, the highest for a U.S. startup.

Slack, which is based on Glitch’s messaging and communication technology, said last month it had more than 500,000 active daily users. Last year, Butterfield said companies such as Airbnb, EBay Inc. and Salesforce.com Inc. were using the product. Subscriptions cost $8 a month or $80 a year, he said at the time.

Slack, which has also raised financing from firms including Accel Partners and Andreessen Horowitz, was planning to double its head count this year from 63 last year, Butterfield said.