Startup Slack gets $US120m infusion to kill email at work

The funding round gives the company, led by Flickr co-founder Stewart Butterfield, a $1.12bn valuation

Slack, a Cloud startup that's landed some big name clients for its business communications product, has raised $U1S20 million at an eye-popping $US1.12 billion valuation.

The San Francisco company's funding and early customer wins are signs that venture capitalists and bold CIOs are eager to back entrepreneurs with modern software that can improve business processes, usually by tapping the cloud and mobility and adapting consumer apps for workplace use.

Slack aims to provide a better environment for communications than usually happens over email. A lot of startups demonize email and make it their mission to provide something better. It was an early rallying cry of enterprise social networking (ESN) providers, though many soon realized they would need to co-exist with email. Time will tell whether Slack can overcome the entrenched email corporate culture.

Slack is a Software-as-a-Service workplace messaging tool for one-to-one or group communication framed within a chat room-like interface. The product also has a strong search engine to let users easily find content in its archive.

The latest funding round, announced Friday and co-led by Kleiner Perkins Caufield & Byers and Google Ventures, brings the total raised by the company to $US162 million. Slack, whose CEO is Flickr co-founder Steward Butterfield, plans to use the cash injection to fuel its marketing, grow internationally and pursue acquisitions.

About 30,000 teams are using Slack, generating 200 million messages per month. About 73,000 out of its 250,000 daily users are on a paid subscription. Adoption has been through word-of-mouth because the company doesn't yet have a sales and marketing team, although it's adding over $US1 million in annual recurring revenue (ARR) each month.

Slack has an open API and is integrated with "dozens" of third-party services, including Twitter, Dropbox, Asana, Google Docs, MailChimp and Zendesk. It launched just eight months ago and customers include Dow Jones, Times of London, eBay, Urban Outfitters, HBO, Nordstrom and Live Nation.

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

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