When Atlassian announced Last week, the company announced its intention to acquire video messaging app Room for $975 million, but it's easy to think the former unicorn is undervalued. But comparing 2021 valuations to 2023 realities, when the dynamics between investors and their portfolio companies have changed dramatically, is not a fair way to look at recent deals. .
After all, Loom is still selling for just under $1 billion, which isn't a terrible return on investment for a company that has raised just over $200 million (according to Crunchbase). Granted, this isn't the $1.53 billion figure we saw in 2021, but it shows a startup worth its then valuation in the current climate.
Loom was founded in 2016 and attracted high-profile investors such as General Catalyst, Sequoia, Coatue, and Andreessen Horowitz along the way. We've also received investment from some of the biggest names in the industry, including Figma CEO Dylan Field, Front CEO Mathilde Collin, and Instagram co-founders Kevin Systrom and Mike Krieger. It's a very considerate company.
The company last raised funding in May 2021 and, as Lou Reed once sang, “Those were different times,” at the aforementioned gaudy unicorn valuation. won $30 million. Remember that in May 2021, most offices were still closed. Many people were still working from home. Video messaging was hot. Everything seemed fine.
The realities of the past two years have changed the equation, causing values to fall as interest rates rise. But that doesn't mean it's a bad deal, said Forrester Research analyst Julie Mohr. “The acquisition cost is not far off. I don't think it's a bad deal for investors. Of course, investors always want to maximize their returns,” Mohr told TechCrunch+.
But just how great was this deal, and what does Atlassian get for the nearly $1 billion deal?
The video killed the radio star
Times are changing. As baby boomers age and leave the workforce, younger workers who grew up with TikTok and YouTube are comfortable using video as a medium of communication, and that applies not only to work but also to leisure time. In that sense, this was a smart move by Atlassian.
“Teaming and collaboration is moving to asynchronous video, and that was one big piece that Atlassian was missing,” said Ray Wang, founder and principal analyst at Constellation Research. “Loom brings the key teaming capabilities Atlassian needed, from transcription to engagement.”