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Was Loom’s $975M exit price fair?

Loom’s $975 Million Acquisition: Was it Worth it? | TechCrunch

In a bold move, Atlassian recently announced its acquisition of the popular video messaging app, Loom, for a staggering $975 million. While some may argue that this valuation falls short of Loom’s previous unicorn status, it’s important to consider the shifting landscape of investor-startup relationships in today’s world.

When we delve into the numbers, it becomes evident that Loom’s sale is nothing to scoff at. With a modest total funding of just over $200 million, the company has managed to secure a significant return on investment. While it may not reach the pinnacle of its $1.53 billion valuation in 2021, it’s worth acknowledging the challenging conditions that startups face in the current economic climate.

Ever since its launch in 2016, Loom has attracted high-profile investors such as General Catalyst, Sequoia, Coatue, and Andreessen Horowitz, as well as industry luminaries including the likes of Figma CEO Dylan Field and Instagram co-founders Kevin Systrom and Mike Krieger. Partnering with such influential figures undoubtedly added to Loom’s appeal.

Taking a glimpse into the past, Loom’s previous funding round in May 2021 generated a whopping $130 million when video messaging was all the rage. However, the ensuing years brought about unforeseen changes, causing valuations to plummet and interest rates to rise. Despite this, Julie Mohr, an analyst at Forrester Research, asserts that the acquisition price is reasonable, highlighting investors’ desire to maximize returns.

But what does Atlassian stand to gain from this significant investment? The answer lies in the changing dynamics of communication preferences. With the gradual departure of baby boomers from the workforce, a new generation of tech-savvy individuals, raised on platforms like TikTok and YouTube, embraces video as a means of both leisure and work communication. Recognizing this trend, Atlassian made a strategic move in acquiring Loom, which brings crucial team collaboration features, such as transcription and engagement, that were once missing from its portfolio.

So was Loom’s $975 million exit a fair price? While opinions may differ, it’s evident that Atlassian has secured a valuable asset in an ever-evolving market. The integration of Loom’s video messaging capabilities positions Atlassian at the forefront of modern communication strategies, preparing them for the future of remote collaboration.

In this dynamic landscape, the significance of timing and adaptability cannot be understated. Atlassian’s acquisition of Loom serves as a testament to their commitment to staying ahead of the curve and embracing the changing needs of the workforce.

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