Slack Finally Completes New Funding at $3.8 Billion Valuation

Slack, the fast-growing office messaging tool, has finally completed a new round of funding, including new investor Thrive Capital, it said Friday.

The funding has been expected for a while and has been much reported. There are other new investors, such as Comcast Ventures and GGV, but current ones also participated.

And that list of venture funders has become long and powerful, including: Index Ventures, Andreessen Horowitz, Accel Partners, Digital Sky Technologies, Horizons Ventures, Institutional Venture Partners, Spark Capital Growth, Google Ventures, Kleiner Perkins Caufield & Byers and Social Capital.

The round values Slack at about $3.8 billion, post-money, lower than the $5 billion valuation it had been considering aiming for earlier this month. But instead of raising $400 million to $500 million, which was considered due to a lot of incoming investment interest, several sources said that the San Francisco-based Slack opted to raise just $200 million this time.

(Just $200 million! Say that three times to manifest a unicorn and wait for Mary Jo White to show up!)

Several sources said that Slack might go back for more funding soon enough, but the new valuation is a healthy bump from its previous funding valuation of $2.8 billion a year ago. Even with an annual recurring revenue of $64 million last year that is growing quickly, this is still a heady price for tech investors. So far, Slack has raised $540 million, including three previous rounds, and has 430 employees.

But all this dough is probably no surprise, since many in Silicon Valley have been coalescing around the perceived “winners” like Uber, Airbnb and Slack. As one source noted of the increasingly selective funding environment, there are “outsize investments for truly unique growth trajectories.”

Or, as Donald Trump would say: Winners win and losers get squat!

In addition, Slack, which is headed by veteran entrepreneur Stewart Butterfield, has also attracted continuing acquisition from major companies like Microsoft, which makes it even more attractive. “There is always an out right now,” said one investor, even if it is not an exit that Butterfield wants to take. “He wants to take this thing big.”

Of course, every tech CEO thinks that, and those interested buyers will not stand still and will surely turn into potent competitors to Slack, which has effectively tapped into a fast-moving workplace trend around Facebook-like messaging. Along with big companies, Slack’s rival set includes Atlassian’s HipChat and many others.

That’s why it needs all this money and is also seeking to move into new product areas beyond messaging in the enterprise, which is the primary use case for its over two million active daily users and 800,000 paid seats. Slack earns its money from those subscriptions, which also makes its business model more appealing to those seeking to invest in the arena.

And with its latest round, Slack is still coming out ahead, as valuations for privately held companies have slipped alongside of publicly traded ones.

Shares of the 44 publicly held cloud software companies, as tracked by the Bessemer Venture Partners Cloud Index, dropped significantly in December and January and are still well below the highs they reached before that.

“They are taking the opportunity to raise money while they can,” said one investor who was approached early in the process. “They have $125 million or $150 million on the balance sheet, so they don’t need it particularly soon.”

Butterfield said as much in a canned statement: “As has always been the case, we are taking this opportunity to further secure our leadership position as we continue to execute on our ambitious growth plans. This capital adds to our existing reserves and increases our ability to focus on an uncompromising long-term, strategic view.”

Translation: Winners get the dough.

The possibility of an investment by Thrive — which has invested in other hot startups like Warby Parker, Stripe, Makerbot, Instagram and Twitch (and not-so-hot Fab) — was first reported by The Information. The New York firm is run by Joshua Kushner — who is a member of the famous real estate family, but seems to be doing just fine on his own.

This article originally appeared on Recode.net.