Slack is considering a direct listing at some point this year, according to reports in both the WSJ and the FT on Friday.
Why it matters: The move would allow Slack stock to be traded on the stock exchange, but it's not an IPO — no new shares would be issued, and the company would not raise any money.
- That's no great hardship for Slack, which has already raised some $1.2 billion, per Crunchbase, and has so much money that it has an in-house VC arm that invests in other companies. Whatever growth constraints it might have, they're not financial.
- Another advantage of a direct listing: It doesn't dilute existing shareholders. If the share price turns out to be significantly lower than earlier-stage investors like SoftBank think the company is worth, then it's a great opportunity for them to increase their stake without the company having to answer pointed questions about taking Saudi money.
- SoftBank's Vision Fund is designed as a private equity fund, not a public-equity fund. But SoftBank founder Masayoshi Son also talks about having a time horizon of hundreds of years, and he is happy to own public companies like Sprint.
The bottom line: A lot of people would love the opportunity to invest in Slack, while many others, including employees, would love the opportunity to be able to sell their stock at will and diversify their investments.
- A direct listing is an elegant solution that brings those two sides together. And if CEO Stewart Butterfield wants to be able to show impressive long-term growth in his share price, then if anything it helps him to go public at a relatively low valuation.
Go deeper: Spotify inspires unicorns to ponder going public via direct listing...