Slack follows Spotify’s lead with a direct listing, and now IPO fundraising is optional

Slack plans to follow Spotify’s lead by listing directly without a fundraising IPO, and that could soon be normal.


January 14, 2019

Slack, the workplace messaging and productivity giant, plans to go public with a direct listing later this year.

Slack will become only the 2nd large company to go public via direct listing (after Spotify did it first last April), proving that the direct listing is a legitimate path to becoming a public company — not just a bizarre move that Spotify pulled once upon a time.

The company doesn’t need anyone to cut them slack

By listing directly, Slack will avoid dealing with the large investments that normally underwrite the IPO process and also avoid the so-called ‘lockup period’ (usually 6 months) that prevents shareholders from selling after a traditional IPO.

Slack will also forgo the chance to raise money in its IPO by listing directly. But, for a company that has already raised more than $1.2B, runway isn’t a huge problem.

When Slack hits the market later this year, it’s expected to do so at a valuation of more than $7.1B — the company’s valuation at its last appraisal for a $427m fundraising round in August.

IPOs aren’t about raising money anymore

Now that Slack and other companies have ways to raise hundreds of millions in private capital whenever they need to, IPOs are no longer necessary as fundraising tools

With Spotify and Slack paving the way, direct listings have become a real alternative to a fundraising IPO for companies that just want to be public and give their employees some liquidity without all the red tape.

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