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Slack is raising another $500 million — and has attracted interest from a range of big buyers like Amazon

The business communications company has gotten acquisition offers in the past from Microsoft and others.

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Slack CEO Stewart Butterfield
Kimberly White/Getty Images for New York Times

Slack, the popular business communications company, is in the midst of raising $500 million at a $5 billion post-money valuation, an effort that has attracted several potential buyers interested in taking out the company ahead of the funding.

Those include Amazon, Microsoft, Google and Salesforce, several of which have previously shown interest in acquiring Slack. Bloomberg reported the interest by Amazon yesterday, with a $9 billion sales price.

That’s obviously an enormous amount of money, even though Slack CEO and founder Stewart Butterfield has long said publicly — and privately — that he wanted to keep the San Francisco startup independent.

Often when a hot company in Silicon Valley is seeking funding, larger players like to make an approach before it is done, since it gives the startup more options.

While there have been no formal offers, said sources, all those companies have long been eyeing Slack, which has transformed the enterprise business with its quirky approach to business communications. For those not familiar, imagine Facebook for the office and you are down the right alley.

Slack has tried hard to attract a wider range of corporate customers, who are wary of new products due to security and privacy concerns. In addition, it has been pushing to create a larger platform developer system to make the service more robust, and has invested in an artificial intelligence team to help automate some functions.

The company currently has projected a $1 billion in revenue next year, sources said, with its existing customers, although it is not yet expected to be profitable. Butterfield said earlier this year that Slack was at $200 million annual recurring revenue at the time.

Still, it is impressive for a company that started out as a gaming company and pivoted when that effort failed. (It has previously raised more than $500 million from investors including Accel, Andreessen Horowitz, Alphabet’s GV, Kleiner Perkins and Thrive Capital.)

But Slack faces enormous challenges including from a range of bigger rivals like Microsoft, who are developing similar products and have more access to markets. Slack also lacks the management depth that such competition will require.

Still, it is a compelling and fast-growing business for many companies and fits in well with their businesses, such as Microsoft’s Azure, Google’s business offerings and Amazon Web Services. And it’s a compelling idea that one company could own the protocol that powers a large amount of business communications — replacing a high volume of email — and other future functions.

But, as I noted, Butterfield has long wanted to build his own big company and adding an enormous funding round would allow Slack some breathing room to get to cash flow positive.

Slack declined to comment.

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