Technoloty News : Loom Exitting at $975Million was a fair price?

ould have been easy for Atlassian to believe that the former unicorn, Loom, was undervalued when it announced its intention to acquire Loom video messaging app for $975 millions last week. Comparing 2021 valuations with the reality of 2023 is not a fair comparison, as the dynamics between investors, their portfolio companies, and the deal have changed dramatically.

Loom sold for just under $1 billion. For a company which raised just over 200 million dollars (per Crunchbase), this is not a bad return on investment. It’s not $1.53 billion, but it is a good return on investment for a company that raised just over $200 million (per Crunchbase).

Loom was launched in 2016, and it attracted a number of big-name investors, including General Catalyst Sequoia Coatue, and Andreessen Horowitz. It also received investment from industry luminaries such as Figma CEO Dylan Field and Front CEO Mathilde Collin, and Instagram cofounders Kevin Systrom & Mike Krieger. This is a pretty impressive group of people.

The company raised its last round of funding in May 2021. As Lou Reed sang, “You knew those were different times”, it scored $130 millions at the gaudy unicorn valuation. In May 2021, the majority of offices were still closed. Many people still worked from home. Video messaging is hot. Everything looked good.

The reality of the past two years changed the equation. As interest rates rose, the value dropped. Julie Mohr is an analyst with Forrester Research. She says that this doesn’t necessarily mean the deal is bad. “The acquisition costs are not too far away; I do not think it’s a bad deal for the investors.” Investors always want to maximize returns, Mohr told TechCrunch+.

What did Atlassian get for its nearly a billion dollars?

Video kills the radio star

The times are changing. As baby boomers retire from the workforce, younger workers, who grew up with TikTok, YouTube, and other video-based communication tools, are more comfortable using them for both work and leisure. In that sense, Atlassian made a smart decision.

Ray Wang, founder of Constellation Research and principal analyst, said: “Teaming and Collaboration is moving to Async Video, and that was one big piece Atlassian was missing.” “Loom provides the key teaming capabilities from transcription to engagement which Atlassian needed.”