Atlassian made a significant announcement today, revealing its acquisition of Loom, the video messaging service, for a substantial $975 million. This is a notable development for Loom, which had previously garnered a valuation of $1.53 billion back in May 2021 when it secured $130 million in a Series C funding round. At that time, the prevailing sentiment in the corporate world was still one of unwavering confidence in the shift towards cloud-based work environments, with a future that seemed remarkably promising.
As the business landscape evolved, so did the valuation of Loom. Nevertheless, Atlassian remains committed to Loom’s potential, with its impressive user base of over 25 million and a staggering five million video conversations taking place each month. Atlassian sees Loom as a valuable asset that can enhance its collaboration tools, particularly within its Jira and Confluence platforms. According to Mike Cannon-Brookes, co-founder and co-CEO of Atlassian, “Async video is the next evolution of team collaboration, and teaming up with Loom helps distributed teams communicate in deeply human ways.”
In addition to the inherent value of Loom, Atlassian is enthusiastic about leveraging artificial intelligence (AI) to expand the capabilities of this acquisition. They aim to introduce features like video transcripts, summaries, documents, and related workflows, providing diverse avenues for teams to connect and collaborate more effectively.
Although Loom’s CEO, Joe Thomas, presented a positive perspective on the acquisition, emphasizing their shared mission to empower effective communication at work, it’s worth noting that this is a common sentiment from acquired CEOs. They often believe that, combined, the two entities can achieve much more and do so at a faster pace than they could individually.
Loom, founded in 2015, had successfully raised over $200 million along its journey, with notable backers in its $30 million Series B round in 2019, including influential figures like Figma CEO Dylan Field, Front CEO Mathilde Collin, and Instagram co-founders Kevin Systrom and Mike Krieger. Loom’s impressive customer roster includes a wide array of industry giants, such as Ford, Tesla, Disney, Walmart, Goldman Sachs, and Amazon, further underscoring the company’s significance in the corporate landscape.
Loom’s reliance on a free tier led to a high number of non-paying users, potentially contributing to financial difficulties. This was evident when they announced a significant layoff of 14% of their workforce in June. Atlassian intends to fund the acquisition using its available cash reserves, and the transaction is anticipated to conclude in the third quarter of the following year, subject to standard conditions and regulatory approval.
(Source: Business Wire | Ron Miller | Tech Crunch | Reinhardt Krause | Investor’s Business Daily)
