Was Loom’s $975 million exit a fair price?

-Gudstory

Was Loom’s $975 million exit a fair price? -Gudstory

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When Atlassian announced set to acquire video messaging app Loom for $975 million last week, it would be easy to think the former unicorn was undervalued. But comparing 2021 valuations to the reality of 2023, when the dynamics between investors and their portfolio companies have changed so dramatically, isn’t really a fair way to look at the recent deal.

When it comes down to it, Loom still sold for just under $1 billion, and for a company that raised a little over $200 million (per Crunchbase), that’s not a terrible return on investment. Sure, this isn’t the $1.53 billion figure we saw in 2021, but shows us a startup that can live up to valuations for that time period under current circumstances.

Loom launched in 2016 and attracted some big-name investors along the way, including General Catalyst, Sequoia, Coatue, and Andreessen Horowitz. It also received investment from industry veterans like Figma CEO Dylan Field, Front CEO Mathilde Collin, and Instagram co-founders Kevin Systrom and Mike Krieger. That’s some pretty heady company.

The company last raised capital in May 2021, and as Lou Reed once sang, “You know, those were different times”: it scored $130 million at the aforementioned gaudy unicorn valuation. Remember in May 2021, most offices were still closed. A large number of people were still working at home. Video messaging was hot. Everything was looking good.

The reality of the last two years changed the equation, and the value fell as interest rates rose. But that doesn’t mean it’s a bad deal, says 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 good was the deal, and what is Atlassian getting for its nearly $1 billion?

video Killed the Radio Star

Time is changing. As baby boomers age out of the workforce, younger workers who grew up with TikTok and YouTube are comfortable using video as a medium of communication, and this can be used at work as well as for leisure. Same goes for. And in that sense, it was a smart move by Atlassian.

“Teaming and collaboration is moving toward async video, and that was a big piece missing for Atlassian,” said Ray Wang, founder and principal analyst at Constellation Research. “Loom brings the key teaming features that Atlassian needed, from transcription to engagement.”

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